What is Making Tax Digital (MTD)?
MTD has been introduced by Government to revolutionize the tax system in the UK.
The new system requires tax records to be kept and submitted digitally, using compatible cloud accounting software.
Over £8.5 billion in tax went unpaid between 2018 and 2019. The aim of MTD ITSA is to make filings more accurate by digitising submissions. This should help people better understand what tax they owe and reduce the deficit.
MTD for VAT has been around since 2019 and will become compulsory from April 2022.
MTD for Income Tax Self-Assessment is the next step in the scheme.
Then MTD for Corporation Tax will be implemented by April 2026.