The government has announced major changes to its Making Tax Digital for business (MTD) proposals. MTD will initially only apply for VAT. VAT registered businesses are mandated into HMRC's plans for quarterly bookkeeping and reporting from 2019. MTD will not become compulsory for other businesses or taxes until at least 2021.

Proposed updated timetable:

  • VAT registered businesses, with turnover over the VAT threshold will be mandated into the MTD reporting system from 2019.
  • Property landlords and small businesses trading below the VAT threshold will join MTD from 2022, although they may opt in to MTD earlier if they wish to do so.
  • There is no news on what is proposed for Corporation Tax.
Year Which tax Who Exceptions
2019 VAT

VAT registered business

Businesses with a turnover of less than £10,000.

A business engaged in excluded activities.

The digitally excluded.

Insolvent business.

Charitable trusts

See MTD: Toolkit for Accountants & Advisers 

2022

Income Tax & Class 4 NICs

Self-employed individuals and landlords

2021/22?

Corporation Tax

Income Tax & Class 4 NICs

Companies

Large partnerships

 

The government says that it has listened to concerns raised by parliamentarians, in particular the Treasury Select Committee, businesses and professional bodies about the pace of change and is taking steps to ensure a smooth transition to a digital tax system.

Mel Stride, Financial Secretary to the Treasury and Paymaster General said, "Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms. We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses."

Changes to VAT reporting came into effect from April 2019. From that date, businesses above the VAT threshold have to provide their VAT information to HMRC through Making Tax Digital software.

Links

Making Tax Digital: The Index
What, when and why

MTD: Toolkit for Accountants & Advisers 
Summarising the new legislation as it affects you and your clients as it unfolds

MTD: Survival guide for the self-employed
Client guide to MTD

 

 

 

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