Industry News
February 6, 2023
  •  
5 mins

Making tax digital for income tax

If you’re an SME owner, you may have heard about Making Tax Digital (MTD) and wondered what it means for your business. MTD for Income Tax Self Assessment (ITSA) is the part of the government’s overall MTD initiative that is designed to make filing income tax easier and more efficient. Let’s take a closer look at how MTD works and what it could mean for your business. 

How Does MTD Work? 

MTD makes it easier to keep track of your income tax returns by using digital software or apps. The software talks directly to HMRC, so you don’t need to worry about manually entering data when submitting your returns. You can also use the software to check your VAT payments, access company accounts, and more. This will help you reduce paperwork and save time. 

 

In addition, MTD provides you with real-time information on how much money you owe in taxes, making it easier to plan ahead financially instead of being surprised when tax deadlines roll around. Furthermore, if there are any errors in the information that you submit via MTD-compatible software, HMRC will be able to quickly identify them and let you know if any changes are needed before submitting a return. This helps ensure that everything is accurate and up-to-date before filing taxes—an important step in avoiding penalties or other issues associated with inaccurate submissions down the line.  

Benefits of MTD 

By switching to digital filing processes like those offered through MTD, SME owners can save not only time but also money—it eliminates the need for an accountant or bookkeeper who specializes in income tax returns, since all calculations are done automatically via the software or app used for filing taxes digitally. Plus, it gives businesses greater control over their cash flow as they have a better understanding of their financial situation in real-time throughout the year instead of waiting until tax season arrives to figure out where they stand financially.  

Conclusion: 

Overall, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) can provide SME owners with many benefits including reduced paperwork, improved accuracy when filing taxes, greater control over cash flow management throughout the year and cost savings due to fewer professional fees related to accounting services. With its streamlined approach to managing income taxes digitally, MTD makes this process easier than ever before!

How can we help:

Gravitate Accounting can help you to be compliant and start the journey for MTD, we have a team of experts that can help you to understand how this will impact you and your business. Recently there has been a delay to the introduction of MTD for ITSA and this has created much confusion so we can help you to understand where you stand and what steps you need to take (if any) and when.

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