You may have heard of MTD, but not really taken much notice or been too busy to read up on it. Well, MTD is becoming more of a requirement as time goes on, so I thought it would be useful to explain what MTD stands for, what it means for your business, and what steps you need to take to be ready for it.
What is MTD?
MTD stands for Making Tax Digital. It means submitting your financial and tax information to Companies House and HMRC in a digital format as opposed to the traditional paper form submission.
How does MTD affect my business?
If you are VAT registered you should have already registered for MTD and be submitting your VAT returns using MTD-compliant software. However, whilst the rollout of MTD was originally for VAT registered companies only, it will be rolled out to all businesses in time – so the quicker you understand it, the better.
What steps do I need to take for MTD?
Following successful registration you will receive confirmation within 3 days. Once confirmation is received, you need to connect MTD to your accounting software.
Setting up MTD in your Accounting Software
Once you have registered for MTD, all future submissions will need to be in a MTD-complaint submission. This can be completed in your accounting software, but you need to connect that software first.
Each accounting system will be slightly different, but the principal is the same. Follow the guidance for setting up MTD – for example, in Xero, they have specific instructions to follow. It is only a few steps and you only need to do this once. You can find the guidance for doing these steps for Xero here.