MAKING TAX DIGITAL - WHAT IS IT?
During the 2015 Budget, the government set out its vision for a transformed tax system, and in December 2015 it published the Making Tax Digital roadmap. This set out the government’s plans to make fundamental changes to the tax system. The idea was to transform tax administration by 2020 to make it more effective, efficient, and easier for taxpayers.
The original Making Tax Digital proposals phased in the implementation of digital record keeping and quarterly updating by businesses, the self-employed and landlords for Income Tax Self-Assessment (ITSA), Value Added Tax (VAT) and Corporation Tax (CT) between tax years 2018/19 and 2020/21.
The government announced in July 2017, that businesses would not be mandated to use the Making Tax Digital system until April 2019.
From that date businesses will be required to submit their VAT returns online using this system. This applies to VAT registered businesses above the current threshold of £85,000.
Businesses with turnover below the VAT threshold will not be required to use the system but can choose to do so. Businesses will also be able to opt in for other taxes, benefitting from a streamlined, digital experience.
The government has stated that it will not widen the scope of Making Tax Digital beyond VAT before the system has been shown to work, and not before April 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. The changes mean that the smallest businesses and landlords will be able to move to keeping digital records for tax at a pace that is right for them.
If you have any concerns about Making Tax Digital, please contact us.
Bryden Johnson are Silver Accredited Xero Providers (HMRC lists Xero as software that is compatible with Making Tax Digital)