Tamen Logo

Michael Sohor & Co is now known as Tamen Accountants. This is a name change only - we are the same dedicated team, and look forward to serving our valued clients for many years to come.

Making Tax Digital (MTD) is HMRC’s way of modernising the tax system. Paper records and returns are out! In their place, business owners must keep digital records and make submissions to HMRC using approved software.

Many businesses in the UK will already be familiar with the MTD moniker, because the first phase of the Revenue’s digital rollout, MTD for VAT, came into effect from April 2019.

In April 2023 the second phase of MTD will be introduced. Making Tax Digital for Income Tax (MTD ITSA) is coming. 

A significant event

This new phase – the introduction of MTD ITSA – is the most significant change to the taxation of individuals since the introduction of the self-assessment system in 1996.

As in 1996, there will be a change in the way we deal with our personal tax affairs.

According to HMRC estimates, there are 4m businesses that pay income tax, but who are not VAT registered. By the time April 2023 rolls round, all of these 4m businesses will need to be keeping digital business records to comply with the new rules.

The new demands

The introduction of MTD ITSA will place new demands on all business:

  • Each trading business or property business will have to submit a separate quarterly report of income and expenses. These are totally separate to VAT reports, which means if your VAT periods don’t align then potentially 8 quarterly reports will be needed.
  • Digital records will have to be kept up-to-date throughout the year to support the quarterly reports made to HMRC.
  • At the end of the tax year, a final end of period statement (EOPS) will also be submitted with this information being used on the taxpayer’s self assessment return.

What you need to do

At the moment the filing formats, deadlines and requirements have not been fully resolved, but it is clear that keeping a manual cash book, or a shoebox full of receipts, which is delivered to the accountant at the end of the year is not going to be sufficient to meet the demands of MTD ITSA.

You will need to keep digital records and submit these directly via HMRC-approved software.

This is where we can help.

How we will help

We can provide you with clever cloud-based software which will make the transition to MTD ITSA  painless. All you will need to do is connect your business bank to our accounting software, and take pictures of your sales & expenses as you go. You can do this using your smartphone. We take care of the rest!

Share this post:

Looking for instant advice?

Our team are waiting to answer any question you may have via our live chat feature.

Socials

Contact our team

Call us on:

01204 391 505

Email us on:

mjs@tamenaccountants.co.uk

Related blog articles

11th Jan 22 | Updates/ News

Why did we choose Tamen?...

We recently changed our name to Tamen Accountants after many years of being known under...

Read more

31st Aug 21 | Tax Planning

Why is tax planning essential for your b...

Simply put this means structuring your business so that you minimise your personal tax bill...

Read more

31st Aug 21 | Management Accounts

10 ways management accounts can help you...

Management accounts got its name from being accounts that are intended for the eyes of...

Read more

Let us know your thoughts

Leave a Reply

Your email address will not be published.