What Is Making Tax Digital?
Definition of Making Tax Digital
Making Tax Digital is a government initiative that sets out a bold vision for a digital tax system to ‘make it easier for individuals and businesses to get tax right and keep on top of their affairs – meaning the end of the tax return for millions’.
HMRC has released consultation papers that outline what it’s planning to do and ask for feedback from taxpayers and their accountants.
It’s also now released summaries of responses to the consultations.
The current plans, in brief, are:
The smallest businesses will be exempt from MTD – the “smallest businesses” will be businesses with annual turnover of less than £10,000.
Taxpayers will send in summaries of their income and expenditure at least four times a year.
More taxpayers will be able to use the cash basis of accounting.
When Will The Changes Happen?
Making Tax Digital has a phased roll-out plan which started in early 2016 and is set to come into full effect from 2020. Anticipated key milestones include:
April 2017 – Private pilot of roll-out starts.
July – December 2017 – Digital tax accounts show taxpayers an overview of their liabilities in one place and HMRC begins a private pilot of Making Tax Digital for VAT.
Spring 2018 – Live pilot of Making Tax Digital for VAT begins.
April 2019 – Businesses with a turnover above the VAT threshold are required to keep digital records and submit quarterly returns for VAT purposes only through their accounting software.
Businesses are able to voluntarily keep digital records for ‘other taxes’.
April 2020 – HMRC looks to widen the scope of Making Tax Digital.
More About Making Tax Digital
Contact our team today for more information on 01482 212057