Making Tax Digital, or MTD is a radical change coming to HMRC, which will see them become the most digitally advanced tax administration in the world. There is an estimated investment of £1.3 billion going into software and infrastructure developments to make the change possible.
Whilst HMRC has remained committed to MTD, they have recognised that the originally planned start date of April 2018 for the first businesses may be unachievable. For this reason, the HMRC have amended the timeline for MTD for business and extended the pilot programmes.
Find out more about what MTD is and how it affects your business, the new changes to MTD timelines and how you can make sure you’re prepared.
Remind Me – What Is Making Tax Digital?
First announced in the Spring 2015 budget; Making Tax Digital is the digitalisation of UK tax system, which will hold a number of benefits for businesses and individuals including:
- Simplified system of reporting should reduce mistakes leading to lower penalisation
- Real-time tax information will allow businesses and individuals to keep track of how much tax they will be paying throughout the year.
- The digital account that MTD will bring gives taxpayers a single picture of all their liabilities and entitlements in once place.
- MTD will replace the more confusing offline self-assessment tax return system.
The first businesses will report and update HMRC digitally by 2019, the date in which their MTD duties begin is known as a ‘staging date’. Their duties will include using commercial software to maintain their records and complete quarterly updates to HMRC.
If you require any further information about MTD and who it affects, please read our previous blog on Making Tax Digital.
The New Timelines For Making Tax Digital
The changes are on the timeline of reporting, rather than a change of what will be reported and how it will be reported. The Government’s confirmed new timetable is as follows:
MTD for income tax – The pilot project for MTD for income tax went live in Autumn 2017. This is currently set to make digital record keeping and quarterly updates to HMRC mandatory for some or all income tax, including landlords with letting income from April 2020.
MTD for VAT – Businesses with a turnover above the VAT threshold (currently £85,000) will be required to keep digital records, and only for VAT purposes starting from 2019. With digital record keeping and quarterly updates to HMRC for other taxes potentially becoming mandatory as of 2020.
MTD for Corporation Tax – The timings for MTD for corporation tax are yet to be confirmed, the current schedule will see everyone who pays corporation tax have MTD reporting and record keeping duties from April 2020.
You can read more about the new timetable for Making Tax Digital here.
Talk To The Experts
This is unlikely to be the last change we will see to the Making Tax Digital scheme. If you’re a business owner or landlord – it pays to keep on top of ever-changing legislation to ensure you are compliant.
At First Call, we have many years’ experience in going through these kinds of changes with businesses and have been following the progress of MTD very closely. If you’re not feeling prepared for MTD, or need a trusted accountant to prepare your business for the transition – give us a call today on 0117 3790810.
Latest posts by Steph (see all)
- Latest Updates on Making Tax Digital for VAT - October 29, 2018
- Reversal of Plan to Scrap Class 2 NICs – What It Means for the Self Employed - October 3, 2018
- First Call Financials New Brand and Identity - July 30, 2018