What I need to know… Making Tax Digital (MTD) is an HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers. The vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) will be mandated to keep digital VAT records and send returns using …
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What I need to know…
Making Tax Digital (MTD) is an HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers. The vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) will be mandated to keep digital VAT records and send returns using Making Tax Digital (MTD)-compatible software from April 2019.
Following the ministerial announcement in 2017, MTD will not be mandated for other taxes until at least April 2020, but businesses can get involved in the Income Tax pilot now on a voluntary basis.
Making Tax Digital for business (MTDfb) begins on 1 April 2019 with MTD for VAT. From that date, VAT-registered businesses above the threshold of £85k will have to keep digital records and submit VAT returns using compatible software. Other components of Making Tax Digital, such as income tax and corporation tax, have been placed on hold until April 2020 at the earliest. Check this resource hub for updates on the latest developments, straight from HMRC.
When does it all happen?
The MTD pilot for VAT is open now ahead of businesses being mandated to use the service next year. Income Tax is also available now on a voluntary basis for the smallest businesses and landlords.
Currently over half of businesses with turnover above the VAT threshold use software for tax purposes, but no taxes other than VAT will be mandated before 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record-keeping to become more widespread amongst businesses.