Making Tax Digital – an update
August 4, 2017
HMRC recently announced the Government’s revised plans for Making Tax Digital (MTD), which will ultimately lead to a fully digital tax system. These announcements have been welcomed as, although HMRC remain committed to implementing MTD, they have delayed the start date and reduced the scope of the regime.
The previous proposals
The Government previously intended to phase in MTD, starting in April 2018. Under those proposals, sole traders and landlords with turnover above the VAT threshold would have been required to keep digital records and report data to HMRC quarterly from April 2018 onwards. Those with turnover below the VAT threshold but above £10,000 would have had to comply from April 2019 onwards.
The latest announcements
The Government have announced that the previous timetable will not be implemented. Instead, it will now be as follows:
- Businesses with turnover above the VAT threshold (currently £85,000) will be required to keep digital records from April 2019, but only for VAT purposes.
- For other taxes, digital record keeping and quarterly reporting will not be required until at least 2020.
- Businesses with turnover below the VAT threshold may keep digital records and file digitally on a voluntary basis. There are no plans for this to be mandatory until at least 2020.
- The above dates apply to unincorporated businesses. Companies will not be brought into the MTD regime until at least April 2020.
Further details on the precise workings of MTD are expected in due course and we will continue to monitor any developments.
In the meantime, although the start date for MTD has been pushed back, digital record keeping could save you both time and money. There are also numerous advantages to seeing your business accounts in real time.
Speak to one of the team at CKLG Accountants to discuss how digital records could benefit your business and how we can help you make the transition.