Things You Should Know About MTD

The MTD initiative is going to make it even easier for businesses to complete their tax return, but many people might not be completely clear on what it involves. This blog will cover some common areas of concern, helping you to feel more confident with your finances even as the rules change. Remember you can always reach out to HMRC or an accountant if you’re still unsure about anything.

Why is MTD being put into place?

MTD is all about making the tax process easier for businesses. It will help both business owners and HMRC to keep accurate records that are up-to-date. What’s more, it aims to make everything quicker and more efficient, decreasing the amount of admin involved with filing your tax return.

Do I Need Software?

In order to take part in MTD, you’ll need to use some compatible software to keep your accounts in order. If you’re not already using accounting software, it will make your life a whole lot easier. Most accounting software will automatically process your invoices and calculate your tax and VAT. This means you’ll make fewer mistakes and have to spend less time processing all your receipts and income.

Make sure the software you choose is aligned with the MTD scheme, as there will be some incompatible programmes out there. If the system you’re considering doesn’t state that it can be used as part of MTD processes, then you’re best picking another one.

Can I Be Fined For Not Using MTD?

There will be some leeway for businesses who are making moves to convert to MTD, but if you refuse to comply outright you will receive fines. Soon you won’t be able to file your VAT return using the old system, so it’s in everyone’s best interest to start converting to the new process as soon as you can. You could consider outsourcing this project to take the load off your shoulders.

Do I Need MTD if I am a Freelancer?

Even sole traders will have to digitise their tax processes. It doesn’t matter if you have employees, become a limited company or stay working for yourself, the MTD tax return system will be the same. This can make things easier if you do grow your business and hire other members of staff, as you won’t have to overhaul your accounts process again.

Are VAT Deadlines Changing?

Don’t worry, VAT deadlines will work in the same way they always have. You won’t have to pay VAT more or less often than you have been in the past.

Why is Accounting Software Better Than Paper Records?

Accounting software will be more secure and easier to use than keeping paper records. While it might not seem like it now, most bookkeeping software is very intuitive and user-friendly. You’ll be able to quickly get to grips with it even if you don’t have accounting experience. While you may still choose to have an accountant to help you manage your finances, software can reduce your need to outsource these services.

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