Unless you’ve been living under a rock, you’ve probably heard about MTD (Making Tax Digital) and that it’s coming to get you like a great white shark honing in on the blonde in a bikini. But before we get into the practical details, we just want to quickly run over what MTD is.
MTD – The Basics
Very simply put, Making Tax Digital is a government initiative to take all communication with sole traders and businesses online. The purpose being to make all tax reporting, payments, and updates filed and submitted online. This is all prepared through approved software which uploads the information directly to HMRC. The big change is quarterly updates will now be required.
Your To-Do Calendar
In the spirit of making the enormous MTD project more manageable, we’re outlining the specific tasks involved in the MTD calendar year for a sole trader and what exactly you need to do to get an A star in the MTD record card.
This list below is a guide to what your new business accounting calendar is going to look like. Month by month. We haven’t included everything (VAT dates, for example), but if you’re a self-employed business owner, this is a rough idea of how you’re going to spend your free time.
Starting in April cos the tax year always ends and starts in April:
- 5 April: End of tax year
- To do: Organise your records for the previous tax year. Including invoices, receipts, and statements.
- 6 April: Start of the new tax year
- To do: Set your good intentions and promise yourself you’ll be diligent about immediately digitising and recording all receipts and admin.
- 7 May: Quarterly MTD Update
- To do: Submit quarterly update covering 6 January–5 April from the previous year (if you were under the MTD scheme the year before)
- 31 July: Payment on Account (see our blog here for more info)
- To do: Work out how much tax you owe for this period and (most importantly) be sure to pay it!
- 7 August: Quarterly MTD update
- To do: Submit a quarterly update covering 6 April–5 July of this year via MTD software.
- 7 November: Quarterly MTD update
- To do: Submit second quarterly update covering 6 July–5 October of this year.
- 31 January: Last date to submit your Self Assessment tax return
- To do: Please don’t leave it this late, but if you have, make sure the self-assessment tax returns are complete, your records are up to date and you’ve submitted all necessary documents.
- 31 January: Payment on Account
- To do: Same as July plus the balancing payment or credit.
- 7 February: Quarterly update
- To do: Submit third quarterly update covering 6 October–5 January of the year just gone.
Lather, rinse, and repeat.
Important public notice: penalties will be applied if HMRC-approved software is not used. If you’re self employed, we heavily recommend either Xero or FreeAgent.
Leave it to the Pros
If you employ staff or are VAT registered, this list is going to be fuller still. So, are you going to be busy? You can bet your bottom dollar you’ll be busy. Do you have a choice? Not on your Nelly. The only real thing you can do to free yourself from the sticky tendrils of MTD, business accounting, and bookkeeping is to contact us here. You really should get back to running your business and leave the boring tax stuff to us.
