MAKING TAX DIGITAL EXPLAINED
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Making Tax Digital does not change how your business profit is calculated. The main change is in how records are kept and how information is sent to HMRC.
Under MTD, you must keep digital records and send quarterly updates using MTD-compatible software. At the end of the tax year, you then make a final submission to confirm or correct the figures.
This means bookkeeping becomes more regular. Instead of waiting until January to organise everything, you will need to keep your records up to date during the year.
Common misconception
Not true.
Making Tax Digital changes how often you report, not how often you pay.
You will send updates to HMRC each quarter, but you still pay tax once a year - just like you do now.
Making Tax Digital is about reporting more regularly, not paying more often.
Making Tax Digital changes the reporting process, not the basic tax calculation.
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