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Make Tax Digital (MTD) is an initiative that aims to make the process of filing and processing tax returns easier. It will affect the ways businesses pay their taxes and the way the government processes VAT returns. In this article, Benjamin Dyer, CEO of Powered Now, delves further into what ‘Making Tax Digital’ is and how to prepare for it.

The new MTD rules will affect VAT returns, Income Tax Self Assessment and Corporation Tax. Here's what you need to know before the deadline for making them digital:

The transition is expected to be seamless, but there will be some changes in the way businesses and individuals keep their accounting and tax records.
VAT registered businesses have to keep their VAT records digitally and submit their VAT returns using ‘MTD compatible software’. If you are VAT registered, we recommend using Powered Now to record your VAT information.
MTD for ITSA (Income Tax Self Assessment) will start from April 2024 for anyone running a business with sales of more than £10,000 per annum. These companies will have to submit quarterly profit and loss figures and then a final tax return - 5 returns in all during each year. They will also need to keep electronic records of sales and costs and these must be linked through to their submission to HMRC.
MTD for Corporation Tax is expected to be introduced in 2026.

How to get MTD ready?

As mentioned above, you will need to be aware of the requirements and be MTD compliant before the deadlines.

All VAT-registered businesses above the VAT have to report and pay any VAT due quarterly and make sure that their records are digitally stored and sent to HMRC using a ‘MTD compatible software’.

If you aren't already using software for MTD for VAT, we recommend Powered Now. Its software fully supports MTD for VAT, so you can relax about tax. Book a free demo today and get started!

About the author

Benjamin Dyer is CEO and co-founder of Powered Now. Powered Now’s mobile app aims to take the pain out of paperwork for plumbers, electricians, builders and other trade businesses.

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What is 'Making Tax Digital' and why you should know about it?