Making Tax Digital: where are we now?

Making Tax Digital (MTD) was initially introduced by the Chancellor in his 2015 Budget with the intention to launch it on 6 April 2018. The Government has since issued a statement announcing that there will be a delay to its introduction and that it will be introduced more gradually than originally planned.
This delay will better enable taxpayers and their advisers to prepare for it.

When will I be affected?
 
MTD will eventually affect all businesses and landlords and will require quarterly reporting to HM Revenue & Customs (HMRC). The revised timetable for introduction is staggered, based on the turnover of the business: 
  1. April 2019 – VAT registered businesses and landlords with an annual turnover above £85,000 (the VAT threshold).
  2. April 2020 – all other businesses and landlords unless turnover is below £10,000 or you qualify as “digitally excluded” which includes charities and community amateur sports clubs. 
The Government has confirmed that these changes will be enacted as part of the Finance Bill (No.2) 2017 which has been introduced and will become law later this year.
 
What will it mean?

A “digital” tax account has been developed by HMRC where you will be able to log in and see your tax affairs online, including tax calculations, view payment options and update your personal details. If you’re an employee, the good news is that you will continue to pay tax under PAYE and are not likely to be affected. 
 
Businesses and landlords will see the greatest changes and will need to send quarterly updates to HMRC using software that is compatible for MTD. They will also be required to file the end of year declaration (which is effectively the Tax Return) meaning that there will be five submissions in the tax year rather than the current one. The dates for the payment of tax remain the same pending further announcements but it is not a stretch to imagine that HMRC will want quarterly on account payments. 
 
As a firm, we are working closely with our software providers for the introduction of MTD on behalf of our clients and will be involved with HMRC in the testing period, which commences in spring 2018.

This article was taken from the Autumn 2017 issue of the Private Client team's Quarterly Tax Digest. You can read all the other articles here.

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