Is Making Tax Digital Beneficial?
Making Tax Digital (MTD), introduced by HMRC, aims to streamline accounting for business owners using technology and reduce tax revenue losses for the Treasury.
HMRC’s research into small businesses and agents assessed their understanding of MTD, focusing on digital record-keeping, quarterly updates, and the option for more frequent tax payments. At MyTaxDoc, we’re here to help you navigate these changes smoothly.
How Will Businesses Benefit from Making Tax Digital? Improved
Information Management
Making Tax Digital (MTD) is designed to reduce the need for businesses to repeatedly supply HMRC with information that it can obtain from other sources. The long-term goal is a more integrated tax system, minimising the administrative burden on taxpayers. While much of the legislation remains in draft, the potential for streamlined processes could significantly ease tax management for businesses. At MyTaxDoc, we’re committed to helping you adapt to these changes for a smoother experience.
Key Benefits of Making Tax Digital
Real-Time Tax Insights
MTD allows HMRC to collect tax information in real-time, so you can understand your tax obligations throughout the year, rather than waiting until year-end.
Comprehensive Financial Overview
The aim is for businesses to have a single digital account that provides a complete financial snapshot, simplifying management and decision-making.
Enhanced Digital Interaction
You’ll interact with HMRC digitally, receiving personalised insights and support when it suits you, enabling better management of your tax affairs.
Concerns About Making Tax Digital
Skepticism of Change
Many business owners feel the existing system meets their needs and question the necessity of transitioning to a new digital framework.
Complexity and Stress
There are worries that the detailed requirements of the new system could be overly complicated, leading to increased stress for users.
Daunting Quarterly Updates
While regular updates can enhance record-keeping, some view the obligation to submit quarterly updates as overwhelming.
Frequently Asked Questions
Is MyTaxDoc compliant with Making Tax Digital?
Yes, at MyTaxDoc, we use software that complies with Making Tax Digital (MTD) regulations. If you’d prefer to avoid the hassle of setting up a new digital system, contact us today to ensure your accounts are fully compliant with MTD requirements.
What are MTD Digital Records and what do I need to keep?
Digital record-keeping is a key element of MTD. You’ll need to maintain your records in a digital format, stored on a computer or in the cloud. If you have handwritten invoices or receipts, these must be transferred to MTD-compliant software before submission. You should also retain original paperwork for at least six years (or ten years for certain cases), as it may be required by HMRC during investigations. At MyTaxDoc, we can help digitise your records if you prefer a more traditional approach.
Will I have to file my VAT return more often due to MTD?
No, MTD does not change how often you need to submit your VAT returns. You will still send the same information, but the process for recording and submitting it will be updated.
Will Making Tax Digital affect sole traders?
Yes, if you are a VAT-registered sole trader with a turnover above £85,000, the MTD rules apply to you. In the future, it’s expected that MTD will extend to all businesses with a turnover over £10,000, including self-employed individuals and landlords.
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