On 13 July 2017, the Government announced MTD will commence in April 2019 for businesses with turnover above the VAT threshold (currently £85,000) and will be delayed until at least 2020 for all other businesses.
What is “Making Tax Digital”?
Making Tax Digital (MTD) is a government initiative to modernise HMRC’s tax system, with the aim of
making the whole process of administrating tax simpler and more efficient. All of your tax information
will be in one place (your digital account) and you will be able to pay tax based on your business
activity during the year, uploading and updating your tax account in real time.
Will it affect me?
If you own a business, or are self-employed and you pay income tax, national insurance, VAT or
corporation tax then it is quite likely you will be affected. This means you could be required to keep
track of your tax affairs digitally using MTD compatible software, and to update HMRC at least
quarterly via your digital tax account. Eventually this will replace annual tax returns. It will be a legal
requirement and there will be penalties for non- compliance.
What do I have to do?
Everyone will be allocated a digital account through the current Government Gateway. You’ll need
to log into this and update your information every quarter, using digital accounting software. This
means a move away from desktop record keeping and onto a Cloud-based system.
As your accountant and tax agent, we can advise you on the software you will need and how to
comply with the new quarterly reporting requirements.
When is all this happening?
MTD starts with businesses above the VAT threshold limits (currently £85,000) for accounting periods
commencing on or after 6 April 2019. Those affected will be required to keep digital records for VAT
purposes. It’s likely that all other businesses will have to comply by 2020.
If you want to discuss how this affects you and your business please contact us.