Embracing the Future of Tax: Your Guide to Making Tax Digital (MTD)
If you run a business in Cornwall, you’ve probably heard about Making Tax Digital (MTD). But what exactly is it, and how will it affect you? We’re here to explain it all in plain English – so you can focus on what you do best: growing your business. Let’s break it down …
What is Making Tax Digital?
Making Tax Digital is a government initiative designed to make tax administration more efficient, accurate, and easier for businesses. Instead of scrambling to fill out paper returns or manually inputting numbers into spreadsheets, MTD shifts everything online.
This means businesses will need to use HMRC-approved accounting software to keep digital records and submit tax returns. The goal? To reduce errors, save time, and give you a clearer picture of your finances.
Why Does It Matter for Your Business?
If you’re a business owner, self-employed, or a landlord earning above a certain threshold, MTD will change how you manage your accounts. It may feel like a hassle at first, but in the long run, it could simplify your processes and improve your financial visibility.
The Benefits of Going Digital
Although change can be daunting, MTD has several benefits:
- Fewer mistakes: Automated calculations reduce human error.
- Time-saving: Digital records streamline the tax return process.
- Real-time insights: You can see how your business is performing at any time.
- Easier tax planning: Regular updates help you avoid unpleasant surprises at year-end.
Which Businesses Does MTD Affect?
MTD impacts a wide range of businesses, including:
- Sole traders and freelancers
- Limited companies
- Partnerships
- Landlords
- E-commerce and retail businesses
- Hospitality and tourism providers
Basically, if you file VAT returns or submit a Self Assessment tax return and meet the income thresholds, MTD will affect you.
Key Deadlines You Need to Know
Understanding when MTD applies to you is crucial for staying compliant. Here are the key dates to keep in mind:
- VAT-registered businesses (Turnover > £85,000): MTD for VAT has been mandatory since April 2019
- All VAT-registered businesses (regardless of turnover): MTD became compulsory from April 2022
- Self-employed & landlords earning over £50,000: MTD for Income Tax Self Assessment (ITSA) comes into effect from April 2026
- Self-employed & landlords earning over £30,000: MTD for ITSA will roll out in April 2027
Although the government has delayed some deadlines, it’s wise to start preparing early to avoid last-minute stress.
How to Get Ready for MTD
Here’s a simple checklist to help you prepare:
- Check your deadlines: Identify when MTD will apply to your business.
- Choose the right software: Use HMRC-compatible accounting software like Xero, QuickBooks, or Sage – we highly recommend Xero, but can help you with a vast variety of cloud-accounting software options.
- Digitise your records: Start keeping digital copies of receipts, invoices, and expenses. Our favourite way to do this is to use an app called Hubdoc because it so easy to use – simply take a photo of your receipt, upload it to Hubdoc, then throw it away! It also links everythings directly to Xero making your life so much easier.
- Train your team: Make sure everyone handling your accounts understands the new processes. We offer training in a variety of cloud accounting platforms, so get in touch if you’d like some help.
- Ask for help: If this feels overwhelming, an accountant (like us!) can guide you through it.
How Harland Accountants Can Support You
We understand that every business is unique – and we’re here to make your transition to MTD as smooth as possible. Whether you need help picking the right software, training your staff, or managing your digital records, Harland Accountants has your back.
We’ve already helped countless businesses across Cornwall and the UK navigate MTD, and we’d love to help yours too.
Final Thoughts
Making Tax Digital is the future of tax administration, and while it might take a little adjustment, the long-term benefits are worth it. The key is to start early, get organised, and seek support if you need it.
If you’re a business owner and you’d like a helping hand with MTD, give us a call. Let’s make tax less taxing – together.
