The deadline for businesses across the UK to sign up for making tax digital (MTD) is coming. Depending on your business, it could be as early as 2022, with further integration arriving in 2023 and beyond. 

Whether you’re a newer business looking to expand more efficiently or a more established one looking to get ahead of the deadline, this guide is for you. Find out how to sign up for making tax digital and take advantage of the benefits it can bring to your business.

Discover:

  • How to sign up for Making Tax Digital
  • What you’ll need to register 
  • How to register and what to do afterwards
  • Which businesses need to register 
  • Why you should register early
  • How to make your MTD accounting easier with Countingup

If you’re starting a new business or have been trading for a while, HMRC’s Making Tax Digital (MTD) initiative might seem intimidating, but the process is simple and can actually help you run your business. For more background on MTD before you register, read our article What is Making Tax Digital?

How to sign up for Making Tax Digital

Registering for Making Tax Digital is a straightforward process as it involves providing HMRC with routine details about your business and its trading. If you’re registered with HMRC already (either as a sole trader or limited company director), the only extra add-on you’ll need beforehand is MTD-compatible software like Countingup.

If you’re setting up a new business or would just like a refresher on the necessary business details, we’ve included a full list of everything you’ll need below.

What you’ll need to register

To sign up for MTD, you’ll need:

  • MTD-compatible software like Countingup
  • Your business’ email address and postal address.
  • A Government Gateway account (if you don’t have a user ID already, you can create one when using the service).
  • Your VAT registration number and latest VAT return (check your online VAT account or VAT registration paperwork).
  • Your National Insurance number (if you’re a sole trader) or company registration number (if you’re a limited company).
  • Your Unique Taxpayer Reference.

Registering for Making Tax Digital

Once you have all this information, sign up with HMRC using the link here.

If you’re due to pay VAT to HMRC soon by Direct Debit, be careful you don’t end up double-paying. HMRC recommends you don’t sign up less than seven days before your return is due or five days after your return is due. If you do not pay by Direct Debit, make sure to sign up at least three days before your return is due.

What to do once you’ve registered

Once registered, you can submit your tax and VAT returns electronically through your accounting software – just like the 1.1 million other UK businesses already doing the same.

Across the year, when you’re trading, you’ll need to keep accurate records of your finances and make sure all your expenses and income are tracked. A two-in-one business current account and accounting app like Countingup will automate these aspects of bookkeeping, saving you hours of time-consuming admin.

Your MTD software should also allow you to understand your finances better by showing you patterns in your business’ performance. This should reveal how you can save money and what strategies are successful in growing your profits. Make sure to set aside time to use your accounts to their full potential and build your business more efficiently.

Which businesses need to register and when

HMRC is requiring nearly every UK business to sign up for MTD with some variation in deadlines depending on your business.

Currently, Making Tax Digital is available for VAT. If your business is registered for VAT (ie. it has a turnover of greater than £85,000), you’re required to follow MTD rules for your first VAT return on or after April 2022. If you’re self-employed or a landlord with an income above £10,000, you’ll need to follow the rules for MTD for Income Tax for your next accounting period from 6th April 2023.  Fortunately, software solutions like Countingup are already available for sole traders and self-employed entrepreneurs to help.

MTD for Corporation tax is expected as early as 2026. HMRC plans to provide companies with a pilot scheme for MTD for Corporation Tax but will not mandate digital accounting before 2026. Therefore, while limited companies have a longer wait, you should expect digital integration of accounting to affect your business soon. Get ahead of the curve and start using software solutions to take advantage of other tools for your business.  

Exemptions for signing up

There are some planned exceptions for individuals and businesses but the criteria are narrow. If HMRC is satisfied with any of the following, they will recognise reasonable grounds for MTD exemption: 

  • If it’s not practical for you to use digital software because of things like age and disability, where you’re not confident or able to use digital software for your business. Or, if you operate in a location where internet access is poor or digital trading isn’t possible.
  • If you (or your business) are currently subject to an insolvency procedure.
  • If your business is run entirely by practising members of a religious society (or order) who refuse to use technology because of their beliefs.

If any of these are relevant to you, you can apply for MTD exemption here.

Why you should register early

If you’re required to sign up for MTD, why wait? You could be losing out on critical insight into your business’ performance by waiting around and signing up only when you have to. 

MTD comes with advantages you can use to build your business more efficiently and with more insight into your trading performance. By having a seamless digital accounting app in place, you can save time from data entry of your business’ finances, chasing up refunds from HMRC and working out tax bills from your profits. 

Save time, money and stress on running your business and sign up for MTD early using this link.

Make your MTD accounting simple with Countingup

Countingup is the business current account and accounting software in one app and provides a digital tax filing service. You can automate VAT calculations associated with your business’ transactions and share your business’ finances and VAT records with your accountant with a touch of a button. 

The Countingup app also offers real-time profit and loss statements, automated invoicing tools and expense reminders, complete with a receipt capture system. With these features, you can make sure your accounts are always up to date and accurate.

Gain more insight into your business’ performance and stay tax compliant while trading. 

Find out more about Countingup here and sign up for free today.