Get Making Tax Digital (MTD) Sorted

Osome's experts will help you get MTD-ready. Learn about what to do, how to register and when to file with HMRC.

Get Making Tax Digital (MTD) Sorted
Get Making Tax Digital (MTD) Sorted

Everything you need to know about Making Tax Digital

Making Tax Digital

What is MTD?

Making Tax Digital (MTD) is the UK government’s plan to fully digitise the tax system. MTD requires you to keep electronic records of your accounts. You update HMRC on your records every quarter and then file your tax return once a year. You do this via specific MTD compliant software.

Is it compulsory?

Since April 2022, MTD for VAT is compulsory for all VAT-registered businesses. All VAT-registered businesses must now register for MTD (whether you are trading below the VAT threshold or not).

The new era of VAT tax compliance

That was then

You or your accountant logged into HMRC’s online system using your Government Gateway ID and password. Filing was done outside your accounting software.

This is now

From April 2022, you can no longer file VAT returns the old way. Record-keeping and VAT submissions must be done digitally. You update HMRC quarterly and you file annually all through your accounting software.

Why change it?

The aim is to make paying your tax more efficient and more accurate. MTD requires businesses to avoid delaying their tax preparation. Every quarter, you (or your accountant) review your data and tell HMRC it’s correct. It’s less historical and more continual.

  • Better tax planning
    Better tax planning
  • More efficiency
    More efficiency
  • Fewer mistakes
    Fewer mistakes
Osome

MTD is easy with Osome

MTD requires you to keep electronic records of your accounts. You update HMRC on your records every quarter and then file your tax return once a year. You do this with your MTD compliant software.

Osome is MTD compliant software — but also so much more. We are accountants, too. With us, registering and keeping compliant is easy. We’re with you on every step.

Talk to Osome

Sign up and get it done. It's that simple!

  1. connect in one click

    Connect in one click

    Work with us and you’ll automatically be MTD ready. Got questions? Your accountant is one click away in the Osome app.

  2. Organise your records

    Organise your records

    We do your admin for you. When the time comes for a quarterly update, your records will be ready.

  3. Hit your deadlines

    Hit your deadlines

    We’ll keep you on the right side of MTD deadlines. Everything will run smoothly. You focus on running your business.

Making Tax Digital for VAT

Making Tax Digital

As of April 2022 all VAT registered businesses in the UK come into MTD scheme. Under Making Tax Digital for VAT, the key takeaways are:

  • You lose the ability to file VAT returns the old way
  • Record-keeping and VAT submissions must be done digitally
  • You update HMRC quarterly and you file annually (An update is not the same as filing your tax. There won’t be four separate tax returns.)
  • You need a software partner that is MTD compliant

MTD requires businesses to avoid delaying their tax preparation. Every quarter, you (or your accountant) simply review your data and tell HMRC it’s correct.

What if I’m VAT registered...

above the VAT threshold

With very limited exceptions, you have been signed up for MTD since April 2019.

under the VAT threshold

VAT-registered businesses must comply with MTD rules starting with April 2022, regardless of your turnover.

The role of an accountant in MTD filing

MTD is an opportunity to deepen your relationship with your accountant. Because digital recordkeeping is more frequent and planned out, things like tax planning will become simpler, too. Your accountant is now much more proactively involved in your day-to-day. It’s less historical and more continual. This allows your accountant to add value proactively.

The role of an accountant in MTD filing
The role of an accountant in MTD filing

MTD Compatible Software

This is the simplest and most popular approach to filing VAT. Using your software, you will update HMRC quarterly on your tax affairs. An update is not the same as filing your tax. There won’t be four separate tax returns.

MTD Compatible Software
MTD Compatible Software

No mess-ups

Together the person and the software make sure you’re always on top of your accounting and compliance tasks. We make sure your reports are mistake-free, filed with the government accurately and on time, and you avoid nasty fines.

No mess-ups
No mess-ups

Get Two Months of Accounting for Free with VAT Registration

We do more than register your for MTD for VAT. We handle you tax reporting, accounting and admin.

  • VAT
    Registration

    Painless VAT registration online

    🚀 apply in minutes

    Price for the service without VAT

    £50

    Vat registration

    We register you online and procure VAT registration number

  • Add Free
    Accounting

    Buy VAT registration and get a free trial of Accounting and VAT filing

    🔥 2 months free

    Billed annually w/o VAT after free trial

    £120/m

    Daily support

    • Annual review by Accountant
    • Osome software
    • Daily bookkeeping
    • Monthly management reports

    Govt & tax filings

    • Сorporation tax return
      (Form CT600)
    • Сonfirmation statement filing
    • Statutory Accounts to Companies House
    • VAT return filing

    E-commerce solutions

    • Free integration with one sales platform: Amazon, Shopify or others
    • Platform fees separated & converted into accounting data
    • Tax rates assigned for each item and each country of sales

    Want to pay monthly?

    £145/m

Need more?

Additional services you may need

  • Additional sales platform £20/m
  • Multicurrency accounting £30/m
  • Foreign VAT filing £50/m
  • Profitability report by sales platform £150/m

Making Tax Digital for Income Tax

Making Tax Digital for Income Tax

MTD for income tax and self assessment

MTD for Income Tax and Self Assessment (ITSA) will start in April 2024. MTD for income tax will be for taxpayers with business and/or property income over £10,000. This includes landlords, self-employed people, sole traders and partnerships.

What are the requirements

With MTD for ITSA, you can no longer use HMRC’s online services to submit your tax returns. Instead, you will use software to meet your compliance obligations. Like MTD for VAT, you submit updates to HMRC at least quarterly (or more frequently if you’d like). Followed finally by an end of period statement. On 31 January (the traditional SA deadline), you submit a single final declaration for all your income.

Making Tax Digital Corporate Taxes

As of April 2022 all VAT registered businesses in the UK come into MTD scheme. Under Making Tax Digital for VAT, the key takeaways are:

  • You lose the ability to file VAT returns the old way
  • Record-keeping and VAT submissions must be done digitally
  • You update HMRC quarterly and you file annually (An update is not the same as filing your tax. There won’t be four separate tax returns.)
  • You need a software partner that is MTD compliant

MTD requires businesses to avoid delaying their tax preparation. Every quarter, you (or your accountant) simply review your data and tell HMRC it’s correct.

Making Tax Digital Corporate Taxes
Calculate your VAT
Calculate your VAT

Check out our
Free VAT calculator

Unsure how to calculate your VAT? Our Osome VAT calculator will help you to calculate your value-added tax rate backwards, add or extract VAT from a given price. See how easy it is!

Calculate your VAT

MTD Deadlines

Penalties

Under MTD (whether for VAT, ITSA or CT), you will most likely file quarterly updates. From January 2023, there will be a penalty regime in place for filing late.

When to file your VAT

Let’s use MTD for VAT as an example. For businesses that now fall under MTD for VAT (since April 2022), your first Making Tax Digital Deadline only applies for the first full VAT period after April 1.

The requirements are exactly the same as the old VAT regime. In the old regime, the deadline for submitting your return and paying any VAT was one calendar month and seven days after the end of the VAT period.

Using this timeline, your MTD deadlines are as follows:

  • 7 August 2022
    For a VAT quarter beginning 1 April 2022
  • 7 September 2022
    For a VAT quarter beginning 1 May 2022
  • 7 October 2022
    For a VAT quarter beginning 1 June 2022

If you’re unsure, speak to your accountant sooner rather than later. A professional accountant will help you manage your deadlines.

Schedule a call
Download Our Free VAT Guide
How

How to be MTD compliant?

Download our free guide to keep all the details at hand and make sure you're on track.

Download for free
Download Our Free VAT Guide
Download

Download our free MTD checklist

If you are VAT registered, you must sign up for MTD. Here’s what you need to get started with Making Tax Digital.

Download for free

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FAQ

  • What is Making Tax Digital?

    Making Tax Digital (MTD) has been introduced by the UK government to digitise the business taxation process. The new MTD rules mean you can no longer submit VAT returns in the same way as before.

    The purpose of implementing MTD is to make the system of filing taxes easier and more efficient for individual taxpayers and businesses. From April 1, 2022, it is mandatory for all VAT-registered businesses to sign up for Making Tax Digital.

    This new rule affects thousands of VAT Registered sole traders and small businesses, with an annual taxable turnover less than the VAT threshold. Previously, if a business was VAT registered and earning over £85k then they would have to, now as of April 2022, every VAT registered business has to do this.

    After April 1, small businesses in the UK can no longer submit VAT returns manually through HMRC online. According to the new MTD rules businesses need to maintain their VAT records in a digital format, and must include your VAT registration information: records, by capturing the information listed below:

    • Your business name;
    • Your business description;
    • Your company’s primary office address;
    • VAT registration number;
    • Records of any common VAT accounting schemes that your company might be using.

    You must also keep digital records of all sales and purchases for your company, including invoices, sales values, and VAT rates. The Osome app maintains these records for you automatically.

  • Do I have to register for Making Tax Digital?

    If you are a VAT-registered business and have not yet signed up for MTD, you must do this as soon as possible to avoid any penalties. Have not already registered your business for VATBy registering you can reclaim VAT on items purchased for business purposes.

    Many businesses in the UK are voluntarily registered since it makes their business records appear more compliant and more professional.

    After completing your initial VAT return for the first time you can sign up for MTD for VAT.

    You have to share all of your accounting records through your MTD-compliant software, updating HMRC on your records quarterly, a milestone-based system. As well as VAT returns and payment deadline.

  • How do I sign up to Making Tax Digital?

    To register for MTD, once you have are already voluntary registered for VAT, you will need to gather the following information:

    • The email address of your business.
    • VAT registration number.
    • The registration and Unique Taxpayer Reference (UTR) if registered as a limited company.
    • The latest VAT Return.
    • The Government Gateway ID you are using for your business.
    • The National Insurance number in case you have a sole trading business.

    Before signing up to MTD, you need to be using the correct MTD-compliant software. Software API must be able to talk to HMRc systems, to submit through the HMRC portal. Osome is unique because we combine the three facets of MTD into one package, we have accountants and software, with Osome you don’t have to think about it.

    Subsequently, you sign up for MTD by clicking «Register» on the GOV.UK website and then answer the questions regarding the information listed in the previous section.

    Please note that you need to be careful when signing up to avoid accidentally paying double amounts for the current VAT return.

    Remember that you should not register less than seven days before your pending VAT Return, or less than five days after your outstanding VAT Return.

    You will receive a confirmation from HMRC within three days of registration.

    Make sure to activate the MTD for VAT features in your accounting software application after you get to know your registration details from HMRC.

    The activation of the software application will not happen automatically. Talk to your software vendor if you are not sure how to proceed.

  • When does Making Tax Digital come into force?

    The Making Tax Digital (MTD) came into force on April 1, 2022. After this date, all VAT-registered businesses need to store their VAT records digitally, using a compatible software application.

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