Making Tax Digital

Following the announcement of a snap general election to take place on 8 June 2017, the Government dropped clauses relating to Making Tax Digital from the Finance Bill 2017 so that it could quickly receive approval from MPs before Parliament dissolved. The policy is now on hold until after the election.

While Making Tax Digital is currently on hold, the Government has said that the clauses dropped from the Finance Bill remain policy and it intends to put forward legislation at the start of the new Parliament to enact them.

We will update this page as details of any new legislation are announced after the election.

Making Tax Digital will be the most significant change to tax filing in a generation.

The government will invest £1.3 billion to transform HM Revenue and Customs (HMRC) into “one of the most digitally advanced tax administrations in the world”, and by 2020, almost all businesses and individual taxpayers will be able to register, file, pay, and update their information online.

All businesses, landlords and self-employed taxpayers with an annual turnover of £10,000 or more will be required to register, file, pay, and update their information online each quarter under MTD

The timetable for the phased introduction of quarterly reporting is as follows:

  • April 2018 – Businesses with profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs), with turnovers in excess of the VAT threshold (£85,000)
  • April 2019 –  Businesses with profits chargeable to Income Tax and pay Class 4 NICs,  with turnovers below the VAT threshold (£85,000)
  • April 2019 – Businesses that are registered for and pay VAT
  • from April 2020 – Businesses that pay Corporation Tax (CT)

Businesses, self-employed people and landlords with annual turnovers of less than £10,000 are exempt from these requirements, as are charities, but not their trading subsidiaries.

Businesses will only have 12 months to become familiar with the changes before late submission penalties will be applied, so it is important that they seek help sooner rather than later.

Digital Tax Accounts: How can we help?

For companies and self-employed workers with a turnover of £10,000 or more, tax returns, payments and financial records will all migrate online.

Each account holder will be given a digital tax account, from where they can operate and oversee their business’s financial operations.

Despite HMRC promising to make the changeover as smooth as possible, it is important not to get left behind when Making Tax Digital comes into effect.

We are prepared for the challenges ahead, and can offer you advice and support with online accountancy software.

Keep up to date with Making Tax Digital

Keep up to date with all new HMRC announcements as they are released by following our Twitter stream or Facebook page.

Three million small businesses to benefit from Making Tax Digital plan changes
Businesses below the VAT threshold to be exempt from Making Tax Digital
Labour pledges to exclude small businesses from quarterly digital reporting if MTD is reinstated
HMRC launches digital tax pilots
HMRC launch MTD pilot for “hundreds of thousands” of businesses
‘True costs’ of Making Tax Digital still unclear, says Treasury Committee
Fines of up to £3,000 for failure to comply with Making Tax Digital, says HMRC
Consultation on late submission penalties for MTD
One-year delay to MTD for small businesses ‘not enough’
HMRC defends Making Tax Digital timescale at House of Lords
Taxman offers concessions on MTD
Making Tax Digital faces fresh criticism from House of Lords
HMRC will ask thousands of sole traders to ‘trial’ Making Tax Digital this year
HMRC publishes long-awaited responses to Making Tax Digital consultations
Treasury Committee calls on HMRC to delay Making Tax Digital
Only six per cent of self-employed business owners are aware of Making Tax Digital
50-page report calls upon Government to delay Making Tax Digital
Government will respond to Making Tax Digital consultations in January 2017
Making Tax Digital could lead to “catastrophic collapse” in customer service, say MPs
Revenue sets out first plans for Making Tax Digital

To find out more about how our leading firm of accountants in Stratford-upon-Avon and Warwickshire can help you, please contact us.