Making Tax Digital (often referred to as MTD) has been introduced by the Government to make it easier for businesses and individuals to get their tax right and to keep on top of their tax affairs, which will eventually mean the end of the annual tax return. Everybody that is affected by MTD will eventually need to file quarterly returns with HMRC, using some form of digital software.
Originally announced in the March Budget 2015, it was set to come into place from April 2018, when self-employed individuals and unincorporated landlords with a turnover of more than £85,000 would need to start using the new system.
However, this original plan was postponed and from April 2019 only businesses registered for VAT, and with a turnover of £85,000 or more (the VAT registration threshold, as mentioned in VAT), have needed to start keeping digital records and filing their VAT returns using MTD compatible software.
It has since been confirmed that VAT registered businesses with a taxable turnover below £85,000 will be required to start using MTD rules for their first VAT return starting or or after 1 April 2022
Self-employed businesses and landlords with business or propery income above £10,000 a year will then need to start using MTD for income tax from their next accounting period starting on or after 6 April 2023.
MTD for Corporation Tax will not be mandated until 2026 at the earliest.
Although the start of MTD was originally postponed by several years, it is now very much on HMRC's agenda as they start to roll this out to all taxes over the next few years.
We are therefore regularly checking how MTD will affect our clients and will continue to keep track of this and advice our clients accordingly.
This may still be a few years away, but it's better to ensure you are ready well in advance so that you can get to grips with new software and iron out any difficulties/errors before this becomes compulsory.
If you have any questions or would like further information regarding MTD please contact us.
Please find below links to various articles about MTD that may be of interest to you: