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Tax Digital

I’ve heard of MTD ITSA but how will it affect me?

If you’re registered for VAT, then you should already be submitting electronic VAT returns and not logging onto .GOV website.

For everyone else, MTD will affect you from April 2024 when you be required to start submitting quarterly submission for your self-assessment tax instead of once a year. These are draft figures and can be amended later down the line.

What’s Involved?

So far, we have been told by HMRC that there 4 x Q submissions, an end of period submission (EOPS for short), and then the final return declaration which essentially pulls all your income into one place and replaces the old tax return.

If you have more than one income source you have to do these Q submissions for each income source over £10k, so landlords and dividend recipients are included. 

If you are self employed, a landlord and an investor you will have 3 lots of submissions to make every quarter.  That's an enormous admin burden.

What if I don’t do them?

There will be penalty fines for late submission.

When do I have to start?

Apr-Jun 24 -     Q1 submission

Jul-Sep 24 -     Q2 submission

Oct-Dec 24 -    Q3 submission

Jan-Mar 25 -    Q4 Submission

31st Jan 26 -     End of period submission

31st Jan 26 -     Final Declaration (of all income)

Practically speaking your 23-24 tax return will be due by 31 January 2025, but your 24-25 tax return first quarter submission will be due by 5th July 2024.

Complicated – well yes.

However, the good news is that most accounting software packages are pulling together updates to their tax software so that these Q returns can be submitted easily. So, if you plan to do this yourself, you can.

Good Bookkeeping

What you are expected to do is have your bookkeeping up to date in time for each submission. Although, adjustments later in the year or at year-end can still be made.

Having regular bookkeeping processed by someone who knows what they’re doing is essential.

Digitalised records

What is also expected is that the paperwork for each sale and purchase must be stored electronically.

You can scan, email, or use snap receipt apps to save purchase receipts & bills into your accounting software.

If you raise sales invoices on word or excel you will be able to keep using that as a storage space but ideally you should upload the invoice as a PDF to the software too.

Most software will allow you to raise sales invoices via an app or desktop, so really no need to use any other system. Less work in my eyes.

Cost of MTD

As things stand now, with what HMRC have told us so far (and I’m sure there’s more to come out), due to the extra work for self-employed individuals, bookkeepers & accountants, fees will rise, so you are advised to get onto monthly or at least quarterly bookkeeping asap.

Will I have to pay the Q bill?

Payment dates have not changed. HMRC have said they have no intention of making payments quarterly.

Watch this space……..

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