Making tax digital
Making Tax Digital (MTD) is a government scheme to make it easier for people and businesses to get tax right by keeping and submitting digital records. It makes the tax system (and how it’s administered) more effective, more efficient and easier to understand.
Better use of information
You won’t have to give HMRC information twice. Employers, banks, building societies and other government departments will all feed their information in to one place.
Tax in real time
HMRC will deal with anything affecting tax as close to real time as possible, to help prevent errors and stop tax due or any repayments you owe building up.
A single financial tax account
You’ll see a comprehensive financial picture in your digital account. It’ll be like online banking but with a personalised picture of your tax.
Digital contact with customers
Business owners will get prompts, advice and support through webchat and secure messaging.
Online accounting softwareFreeAgent accounting software is completely free for business current account holders, as long as your retain your business bank account.
VAT-registered businesses with a taxable turnover above the VAT threshold of £85,000 need to keep digital records and use software to submit their VAT returns. If your taxable turnover is below the threshold, you’ll need to follow the digital rules for your first return on or after April 2022.
Self-employed businesses and landlords with annual business or property income above £10,000 need to follow the MTD rules for income tax from their next accounting period starting on or after 6 April 2023.
There’s been a consultation published on MTD for corporation tax and you’ll also have the chance to take part in a pilot. No-one will have to use it before 2026.
Are you ready for Self Assessment?
If you’re a sole trader or a director of a limited company, FreeAgent accounting software can help you prepare for the 31st January Self Assessment deadline. And it’s completely free*.
*FreeAgent is part of our business current account service. The full version of FreeAgent is completely free as long as you retain your business bank account.
Making your business more digital
It’s not just the tax system that can reap the benefits of going digital. If you don’t have a website for your business, you might be missing out on new markets, and if you do already have one, have you considered other ways to do business online, like offering workshops or online events?