Making Tax Digital (MTD) is the HMRC plan to switch tax administration from paper-based systems to a digital tax platform.
Getting ready for Making Tax Digital (MTD) can seem like an effort, but the good news is that it will almost certainly make life easier. The aim of MTD is to help individuals and businesses manage their accounts more efficiently and get tax right.
Here are some of the benefits we think make it worth switching to MTD.
1. Increased visibility
No more searching through piles of paper or waiting apprehensively to find out how much tax you’ll have to pay and the end of the tax year. MTD means you can access real-time tax information all year round, and track what your tax liability is likely to be.
You can also view your business performance throughout the year, allowing you to adjust your business strategy accordingly.
2. More accurate and efficient record keeping
MTD will make it easier to keep more accurate records and avoid costly mistakes. You’ll make quarterly submissions rather than a single tax return before the year end, making it easier to keep on top of your admin. The technology will also pick up any discrepancies earlier in the process.
Using software, such as Dext, can help you keep a digital record of all your receipts, so your records stay up-to-date, organised and accessible.
3. Immediate access to financial information
In addition to being able to access real-time tax data from your desktop or mobile devices, you’ll be able to get an overview of your affairs and receive reminders, advice and support through the HMRC system.
Using Xero will make it easier to keep track of debtors and creditors because you can view who owes you money, and who you owe money to, all in one place, whenever you want.
4. Reduced stress
While tax returns will be more frequent, HMRC will require less information from individuals because they will gather data from other sources, making the whole process simpler and quicker for you.
With submissions spread across the year, you will no longer have the pressure of getting your annual, one-off tax return done in January.
Because the new system tracks your accounts all year round, you should know what your tax bill is likely to be as soon as the final submission is made in April. This means you have fewer unknowns and more time to save to pay your tax bill.
5. Added value
MTD has the potential to add value to your business. For example, using accounting software will save you time which can be allocated to other areas of your business. Having digital access to your financial data also makes it easier to analyse and identify ways to increase profit.
We can support you through every step of the MTD process, advise you on software and make sure you feel confident and secure switching to digital.
Contact us today to find out more.