Making Tax Digital for Dentists

Making Tax Digital is the UK Government’s initiative to “make it easier for individuals and businesses to get their tax right and keep on top of their affairs.”

The goal is to make the UK’s tax infrastructure as digital as possible. It is hoped that this will make HMRC’s tax system more efficient, effective and easier to use and navigate for businesses. 

Making Tax Digital entails swapping your accounts and tax from paper records to online, digital records. The idea is for as many businesses and sole traders as possible to go completely paperless with their accounts and tax.

Making Tax Digital is split into the following phases: 

• Making Tax Digital for VAT (April 2022)
• Making Tax Digital for Income Tax (April 2024)
• Making Tax Digital for Income Tax Self-Assessment (April 2024)
• Making Tax Digital for Corporation Tax (2026)

So, how will Making Tax Digital affect dentists?

Samera have been my accountant for 7 years and have continued to provide me with accurate accounts and timely submissions. Their digital workflow eases the management of receipts and filing. I have found them to be supportive and knowledgeable particularly during the recent crisis. Thank you.

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Making Tax Digital for Dentists

Making Tax Digital for Dental Associates

The first phase of MTD was introduced in April 2019 in Making Tax Digital for VAT, which regulated business with a taxable turnover over £85,000.

On 6th April 2024 (originally scheduled for 2023 but pushed back due to issues arising from COVID-19), Self Assessment tax payers will also need to abide by the Making Tax Digital for Income Tax regulations. 

These new regulations in 2024 will only apply to Self Assessment taxpayers who file a taxable income above £10,000 a year. As a dentist, you almost certainly will.

Click here to listen to our podcasts on how dentists can reduce their tax bill.

For the most part, these new regulations will apply on 6th April of the 3rd trading year to businesses that begin trading after 6th April 2023. 

After 6th April 2024, you will have to use digital software to hold and process digital records of your accounts and tax. Paper records of your accounts and tax will no longer be allowed by law. 

The software you use to hold and process your digital records must be Making Tax Digital compliant. 

You can find a list of compliant software on the .gov.uk website here.

Your Self Assessment tax return will also change. You will instead be required to submit 5 reports throughout the year. These are, 4 quarterly summaries of your accounts, as well as an end-of-year report. 

The dates you will be required to submit these returns are: 

• 5th August
• 5th November
• 5th February
• 5th May

The end of year return must be filed by 31st January after each relevant tax year. Your tax bill will also need to be paid by 31st January following the relevant year, but you will be able to make tax payments throughout the year if you wish. 

You can find out more about accounts and tax for dental associates here.

Making Tax Digital for Dental Practices

Before April 2022, only businesses with a taxable turnover exceeding £85,000 must keep digital records and abide by Making Tax Digital regulations. After April 2022, all VAT-registered businesses must do the same. 

You can sign up to the scheme early voluntarily, no matter your taxable turnover. This may be worth doing, in only to give yourself more time to get used to the new process. 

Click here to watch our webinar on using Xero and Hubdoc for your dental practice accounts.

It is also required that your practice uses digital accounting software that is compliant with Making Tax Digital, such as Xero. You will need to keep your digital records for 6 years. 

You can find a list of compliant software on the .gov.uk website here.

Here is a list of example records you will need to keep from the UK Government website: 

• your business name, address and VAT registration number
• any VAT accounting schemes you use
• the VAT on goods and services you supply, for example everything you sell, lease, transfer or hire out (supplies made)
• the VAT on goods and services you receive, for example everything you buy, lease, rent or hire (supplies received)
• any adjustments you make to a return
• the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you buy and sell
• the rate of VAT charged on goods and services you supply
• reverse charge transactions – where you record the VAT on both the sale price and the purchase price of goods and services you buy
• your total daily gross takings if you use a retail scheme
• items you can reclaim VAT on if you use the Flat Rate Scheme
• your total sales, and the VAT on those sales, if you trade in gold and use the Gold Accounting Scheme

You can find out more about accounts and tax for dental practices here.

Making Tax Digital With Samera

From 1st April 2022 we will no longer be accepting paper records for our accountancy clients. All accountancy and tax records will need to be in digital format. 

We only use software that is compliant with the Making Tax Digital scheme. We are a Xero Gold Partner and have been pioneering digital accountancy for dentists for years. 

When you go digital with our dental accountants, your accounts and tax are received, processed and stored safely, securely and easily. 

All you need to do is scan your receipts and invoices, upload them to Hubdoc and we will do the rest! 

The process is quick, simple and safe – which means you save time, effort and money.

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