Tag Archive for Making Tax Digital

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9 myths about Making Tax Digital busted

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By Henry Williams on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Put simply, MTD is the government initiative to digitise the tax system and is being introduced in multiple stages over the next few years. HMRC hopes the new system will be fairer and more efficient and make it easier for businesses and individuals to get their taxes right.

Since April 2022, MTD for VAT has applied to all VAT-registered businesses. And as of April 2026, MTD for Income Tax will be phased in, with those earning over £50,000 from self-employment and/or property in the 24/25 tax year the first to be mandated. Initially due to come into effect in 2024, it was delayed due to the cost of living crisis to relieve additional pressure from small business owners.

In July 2025, HMRC announced that it has scrapped plans for MTD for Corporation Tax. Instead, it will renew its internal systems for Corporation Tax ahead of future improvements.

In this article, we’re aiming to clear up any remaining confusion by busting nine common MTD myths. 

1. You’ll pay more tax with MTD

Provided you’ve been doing your tax returns correctly, you shouldn’t be paying any more or less tax than

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Making Tax Digital for corporation tax scrapped

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By Anna Jordan on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

The government has confirmed that Making Tax Digital (MTD) will be scrapped for corporation tax (CT).

It was revealed in passing in HMRC’s Transformation Roadmap. Within the document, it states:

‘HMRC do not intend to introduce MTD for CT but are developing an approach to the future administration of CT that is suited to the varying needs of the diverse CT population.’

It remains to be seen what this means for how corporation tax processes will develop. What we do know is that it will begin with ‘the renewal of existing internal systems’ for corporation tax to make way for future innovations.

Andrew Tall, partner at HW Fisher, goes into more detail: “One aspect of the ongoing digitalisation effort involves discussions between HMRC and key stakeholders around the format of CT computations, with HMRC highlighting the need for standardisation and improved disclosure.

“Future areas of the project are expected to significantly expand mandatory disclosure in elements that are currently not consistently disclosed, such as the presence and content of a detailed profit and loss account, the expenses therein that are analysed, and the level of detail of such disclosure,” he said.

It could

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5 things you need to know about MTD for Income Tax

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By Chris Downing on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Making Tax Digital (MTD) for Income Tax will change how eligible sole traders and landlords handle their income tax from April 2026, adding in some new legal requirements.

It’s one of the biggest shake-ups in personal tax for a generation.

Here are five things you need to know to kick-start your own MTD for Income Tax preparations.

1. Making Tax Digital for Income Tax starts in April 2026 or April 2027 – or possibly April 2028

If you have gross income over £50,000, you’ll have to start following the MTD for Income Tax rules from April 2026.

If have gross income above £30,000, you’ll have to follow the new rules a year later, in April 2027.

And in April 2028, if your gross income is over £20,000, you’ll have to comply with the new rules.

The government has hinted that MTD for Income Tax will apply to incomes lower than this but hasn’t yet made any announcements.

2. Here’s the basic MTD for Income Tax requirements

Here’s a short summary of what Making Tax Digital for Income Tax means for you:

Using compatible software, such as Sage Accounting, you’ll need to send HMRC quarterly reports for

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Where to start with Making Tax Digital for Income Tax

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By Chris Downing on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Making Tax Digital (MTD) is the UK government’s flagship programme to make it easier for businesses and individuals to get their tax right. As you might guess from the name, it does this by legislating the digitalisation of tax data and its submission to HMRC. MTD for VAT is already in place, but Making Tax Digital for Income Tax is coming in from April 2026.

In this article, I answer questions that you may have around this, and what it means for your business finances.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is new legislation that changes how income tax is administered.

It affects self-employed individuals and landlords with gross income over certain levels as of the following dates:

April 2026: If you have gross income over £50,000 in the 2024/25 tax year and subsequent threshold dates.

April 2027: If you have gross income over £30,000 in the 2025/26 tax year and subsequent threshold dates.

April 2028: if you have gross income over £20,000 in the 2026 to 2027 tax year and subsequent threshold dates.

Am I affected by MTD for Income Tax?

If you run your

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How to do bookkeeping as a small business

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By Ryan Grundy on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

There’s no getting away from it – if you run a small business, you’ve got to run its bookkeeping too. Sometimes, this can seem like an overwhelming and lengthy job, especially if you’re not 100 per cent sure what you’re doing.

You also probably find it a bit of a chore, since you didn’t start your business to search through boxes of receipts, enter data into spreadsheets, or read through bank statements at eleven o’clock at night.

Here’s the good news. With the right approach and tools, you can make sure all aspects of bookkeeping when it comes to your small business are meticulously taken care of, without feeling stressed or sacrificing too many hours each month.

In this article, we’ll show you how.

It covers:

What is bookkeeping?

Can I do my own bookkeeping?

How to make bookkeeping easier

Which software features to look out for

What is bookkeeping?

Using “bookkeeping” and “accounting” interchangeably is common, but the two terms do have different meanings. You’ll need to know the difference, because accounting is not something you can really tackle all by yourself (though you’ll still need high involvement in it).

So, how do they

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What is Making Tax Digital and why should you care?

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By Dan Matthews on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Making Tax Digital explained
Making Tax Digital (MTD) is a government plan to shift paper-based tax reporting online, spelling the end of form-filling for millions of UK businesses. Changes affecting value added tax (VAT), income tax and corporation tax are being introduced over time, meaning a growing number of small firms are falling under MTD’s scope.
Businesses with turnovers higher than £85,000 are already required file quarterly VAT submissions digitally under MTD rules, records for which must be kept online and submitted via software. Those with a turnover lower than the £85,000 threshold will have to comply by April 2022.
Next in line for digitisation is income tax: individuals with a self employed or property income over £10,000 per year must adopt digital filing from 6 April 2023, while corporation tax will shift online sometime after 2026 following a pilot period, according to the latest plans.
What businesses must do under MTD rules:

Keep digital records
Submit summary information to HMRC once a quarter
File an end of period statement to make any adjustments and a final declaration by 31st January each year.

Why is tax going digital?
There are many reasons for the

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Hot Business News Today

What is Making Tax Digital and why should you care?

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By Dan Matthews on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Making Tax Digital explained
Making Tax Digital (MTD) is a government plan to shift paper-based tax reporting online, spelling the end of form-filling for millions of UK businesses. Changes affecting value added tax (VAT), income tax and corporation tax are being introduced over time, meaning a growing number of small firms are falling under MTD’s scope.
Businesses with turnovers higher than £85,000 are already required file quarterly VAT submissions digitally under MTD rules, records for which must be kept online and submitted via software. Those with a turnover lower than the £85,000 threshold will have to comply by April 2022.
Next in line for digitisation is income tax: individuals with a self employed or property income over £10,000 per year must adopt digital filing from 6 April 2023, while corporation tax will shift online sometime after 2026 following a pilot period, according to the latest plans.
What businesses must do under MTD rules:

Keep digital records
Submit summary information to HMRC once a quarter
File an end of period statement to make any adjustments and a final declaration by 31st January each year.

Why is tax going digital?
There are many reasons for the

Read more...

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Best UK small business accounting software – review guide

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Originally written by Timothy Adler on Small Business
UPDATED: As every entrepreneur knows, with everything going digital, more and more is being pushed onto the poor small business owner.
HMRC rolled out its Making Tax Digital initiative in 2019, compelling 1.2 million VAT-registered businesses which earn £85,000 plus in turnover to file returns online. Those businesses now must submit their quarterly VAT returns under the new system.
However, it’s not going to stop there – MTD will be widened to include income tax and corporation tax from 2021 onward.
Given that moving to small business accounting software is inevitable for every SME, surely, it’s time to put away your paper and pencil (or your standalone Excel spreadsheet).
To help you decide, we’ve looked at the best UK small business accounting software packages on the market.

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Best UK small business accounting software
Every small business is different. Most small businesses can make do with basic functions like invoicing, bank reconciliation, income and expense tracking and financial report generation.
Indeed, most UK small business accounting software offers the same features, it’s just that you may feel more comfortable with how one is designed over another – and then of

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All small businesses to go Making Tax Digital by 2024, Treasury suggests

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Originally written by Timothy Adler on Small Business
Millions of self-employed and small businesses face having to pay income and corporate tax bills much earlier, as the Treasury seeks to fill its £31bn tax gap.
The £31bn is the money HMRC should be collecting but falls through the gaps in the current tax system.
And small businesses, including freelancers, are the worst miscreants for this, accounting for £13.4bn of this tax gap.
>See also: 1m self-employed face having to pay tax bill larger than what they earnt
As part of a raft of 30 consultations and updates, the Treasury has proposed bringing forward the payment of income tax self-assessment and corporation tax for small companies. The Treasury suggested accelerating all tax payments after 2024 to fulfil its “vision [for] a tax system that works closer to real time”.
The consultation suggested using the rollout of the requirements on digital filing of tax returns under Making Tax Digital over the next two years to use up-to-date data to “bring the calculation and payment of tax closer to the point where the income or profit arises”.
Jesse Norman, financial secretary to the Treasury, said the government recognised the plan would be a significant change and, as a result, “has

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Hot Business News Today

All small businesses to go Making Tax Digital by 2024, Treasury suggests

by  •  • 0 Comments

Originally written by Timothy Adler on Small Business
Millions of self-employed and small businesses face having to pay income and corporate tax bills much earlier, as the Treasury seeks to fill its £31bn tax gap.
The £31bn is the money HMRC should be collecting but falls through the gaps in the current tax system.
And small businesses, including freelancers, are the worst miscreants for this, accounting for £13.4bn of this tax gap.
>See also: 1m self-employed face having to pay tax bill larger than what they earnt
As part of a raft of 30 consultations and updates, the Treasury has proposed bringing forward the payment of income tax self-assessment and corporation tax for small companies. The Treasury suggested accelerating all tax payments after 2024 to fulfil its “vision [for] a tax system that works closer to real time”.
The consultation suggested using the rollout of the requirements on digital filing of tax returns under Making Tax Digital over the next two years to use up-to-date data to “bring the calculation and payment of tax closer to the point where the income or profit arises”.
Jesse Norman, financial secretary to the Treasury, said the government recognised the plan would be a significant change and, as a result, “has

Read more...