MTD EXPLAINED

MTD Explained

MTD is HM Revenue & Customs (HMRC) revolutionary strategy to take the UK tax system online. The main goal is to make tax administration more effective, more efficient and easier for taxpayers to get their taxes right.

The essential requirement of MTD is that businesses must maintain their records in a digital format. This can include compatible software or spreadsheets. Maintaining records in paper format ceases to meet the legal requirements.

By maintaining digital records HMRC believe that it will be easier for both individuals and businesses to complete their tax obligations with less errors.

MTD will apply to a variety of taxpayers.

TIP: In our opinion, it is only a matter of time before all businesses need to be MTD compliant. We recommend that if you currently maintain records in paper format that you consider how you will change to a digital format when the requirement becomes mandatory.

MTD Explained for VAT Registered Businesses

From April 2019 VAT registered businesses with taxable turnover in excess of £85,000 must comply with the new MTD for VAT requirements.

From April 2022 all VAT registered businesses regardless of turnover were required to comply with MTD for VAT.

Although this is mandatory, MTD registration is not automatic. Businesses must register themselves if required or alternatively appoint an agent to complete the process for you.

To assist with this we have created a MTD for VAT Registration webpage, which includes a step by step guide on the MTD registration process.

MTD Explained for Business

Some businesses will already be MTD compliant. They will be required to maintain digital records as part of the MTD for VAT requirements mentioned above.

MTD for Corporation Tax and the self-employed is expected to follow the introduction of MTD for VAT. This will affect the remaining businesses which are either not VAT registered (typically landlords) and those businesses with turnover under £85,000.

The original date for the introduction was April 2020, however the latest proposal date is 2025, at the earliest.

MTD Explained for Business

Some businesses will already be MTD compliant. They will be required to maintain digital records as part of the MTD for VAT requirements mentioned above.

MTD for Corporation Tax and the self-employed is expected to follow the introduction of MTD for VAT. This will affect the remaining businesses which are either not VAT registered (typically landlords) and those businesses with turnover under £85,000.

The original date for the introduction was April 2020, however the latest proposal date is 2025, at the earliest.

MTD Explained for Individuals

Most UK individuals pay their taxes under the PAYE system. Historically this meant receiving paper records from employers (payslips, P45s, P60s), private pension P60s, annual interest from bank statements, dividend vouchers from Companies, etc. Everything was paper based.

HMRC want the system to move to a digital platform. The start of this was the creation of the Personal Tax Account (PTA).

The PTA gives individuals visibility of their tax records as well as access to various online information, forms and other services.