Update: Making Tax Digital | 22 July 2020
HMRC announced its roadmap for the future rollout of Making Tax Digital (‘MTD’) yesterday (21 July) and the scope will increase significantly.
MTD for VAT
Currently, MTD for VAT is only compulsory for businesses with a taxable turnover in excess of the VAT registration threshold. However, from April 2022, MTD will become compulsory for all VAT registered businesses. This means that all VAT registered businesses will be required to keep digital records and submit their VAT returns using compatible software. For further information about the MTD record keeping requirements and compatible software please see here.
MTD for income tax
MTD for income tax will apply from April 2023 for unincorporated businesses and landlords with total gross income above £10,000. Those that join MTD for income tax will be required to submit to HMRC a quarterly summary of their business income and expenses using compatible software. The aim of the quarterly submissions of income and expenses is that taxpayers will receive an estimated tax calculation to help them budget for their tax. They would also be able to add other information at the year-end (e.g. employment income, interest, dividends, pension contributions) to finalise their tax position and ultimately this may replace the self-assessment.
MTD for corporation tax
The Government will consult later in the year about extending MTD to companies.
As always we will keep you updated should official guidance change, or any additional information becomes available. In the meantime if you have any questions you should not hesitate to contact our dedicated Making Tax Digital Team.