Making Tax Digital (MTD) for IT: What You Need to Know!

Welcome to Nara Accountancy’s guide on Making Tax Digital (MTD) for IT! If you’re scratching your head wondering what MTD means for you and your business, don’t worry—you’re not alone. We’re here to break it down in a way that won’t send you running for the hills!

What is Making Tax Digital (MTD)?

MTD is HMRC’s initiative to move tax reporting into the digital age. No more piles of receipts stuffed in shoeboxes or frantic last-minute tax return submissions! Instead, businesses and individuals must use compatible software to keep digital records and submit updates to HMRC.

It’s all about making tax easier, more efficient, and (hopefully) less stressful.

Who Needs to Comply?

If you’re self-employed, a landlord, or run a business, MTD might already apply to you—or it will soon! Here’s the timeline:

• MTD for VAT: Already in place for VAT-registered businesses earning over £85,000 since April 2019. From April 2022, it applies to all VAT-registered businesses, regardless of turnover.

• MTD for Income Tax (ITSA): Coming into play from April 2026 for self-employed individuals and landlords earning over £50,000 (dropping to £30,000 from April 2027).

• MTD for Corporation Tax: Expected at some point after 2026—details are still in the works!

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How Does MTD Work?

Instead of the traditional annual tax return, MTD requires you to:

1. Keep digital records – Say goodbye to paper chaos! MTD-compatible software helps you track income and expenses effortlessly.

2. Send quarterly updates – No more nasty surprises at the end of the tax year; you’ll submit updates every three months.

3. Submit an End of Period Statement (EOPS) and Final Declaration – This wraps up your tax year and confirms your tax liability. What we currently know as a tax return.

   
   

What Software Do You Need?

To comply with MTD, you’ll need HMRC-approved accounting software like Xero, QuickBooks, or FreeAgent. These tools help you track expenses, send invoices, and submit tax returns with minimal effort.

What Are the Benefits?

We know change can be daunting and quite often frustrating, but MTD isn’t just another hoop to jump through—it actually has some great perks:

• Fewer errors – Automation reduces mistakes (and those dreaded HMRC penalties!)

• Better financial insight – Real-time tracking helps you stay on top of cash flow.

• Less last-minute stress – No more panicked tax returns at midnight on 30th January!

  
  

What Should You Do Next?

If you’re not MTD-compliant yet, now is the time to get started. Here’s what we recommend:

1. Check when MTD applies to you – If your total income is over £50,000 and you’re self-employed or a landlord, it’s coming soon! You should receive a letter from HMRC very soon.

2. Choose the right software – We can help you pick one that suits your business.

3. Get support – If all this sounds like tax jargon overload, don’t worry! At Nära Accountancy, we’re here to guide you through the transition smoothly.

   
   

Final Thoughts

MTD might sound like just another admin headache, but it’s actually a step toward a simpler, more transparent tax system. Plus, with the right software (and the right accountant wink wink), it can make managing your finances a breeze!

Need help getting MTD-ready? Give us a shout at Nära Accountancy, and we’ll make sure you’re sorted—without the stress!

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