The Making Tax Digital (MTD) initiative was removed from the Finance Bill in April ahead of the General Election – however, this won’t be the end of the plans and they will no doubt be back on the fast track agenda soon! Here is a quick introduction to what MTD is all about and, importantly, what it means for you as dentists.
MTD is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their tax affairs and will mean the end of the annual tax return for millions of people. HMRC sees this as a major step forward in modernising the UK tax system for the benefit of all taxpayers through the introduction of online digital tax accounts.
The original plan was that if were self-employed with an annual turnover of more than £85,000, from 6 April 2018 you would be required to start making quarterly submissions of your income and expenses to HMRC using authorised software – the idea being you'd maintain digital records for this purpose. If you have a 5th April year end, your first submission would be on 5th July and quarterly thereafter. There would then be 10 months after the year end to finalise your tax position for the year through your digital tax account.
More work for dentists
The dental profession may find this shift to quarterly submissions particularly onerous, as without being VAT registered, the need for quarterly or monthly figures is an entirely new concept. Practice owners and associates alike are going to have to keep on top of their finances on a more frequent basis to keep up with the government’s initiative to, as Edward Troup, Executive Chair, HMRC has said: '…bring the tax system into the 21st century and help make HMRC one of the most digitally-advanced tax administrations in the world.'
About the author
Sophie Kwiatkowski is an accountant with PFM Dental Accountancy – part of the PFM Dental group, which can help with everything from mortgages and financial advice to legal services and practice purchases.