making tax digital

The start date for Making Tax Digital, the government’s £1.3bn investment programme to digitise HMRC, has been delayed due to last year’s EU referendum and this year’s snap General Election.

Originally planned to be effective from April 2018, Making Tax Digital is now set to be a more gradual process. This has been a great relief to many, as the initial start date for MTD for businesses, which meant compulsory digital record keeping and quarterly updates, was a tall order and considered moving too fast.

Financial Secretary to the Treasury and Paymaster General, Mel Stride MP, 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.’

Making Tax Digital: A New Timetable

With this in mind a new timetable for Making Tax Digital has recently been revealed by the Treasury.

  • Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes.
  • And these businesses will only need to do so from 2019.
  • Other businesses will not be asked to keep digital records, or to update HMRC quarterly for other taxes (income tax and corporation tax) until at least April 2020.

Quarterly updates will only involve VAT until ‘the system has been shown to work well’, according to Mel Stride MP.

HMRC also confirmed that for smaller businesses, MTD will be voluntary.  So businesses who are not required to be VAT registered can choose when to move to the digital system. Although it may become compulsory at some time, Making Tax Digital for income tax and NIC will be voluntary for some years.

The Government also clarified that if keeping digital records does become compulsory in the future, all business will be given a two-year bedding in period to comfortably adapt to the changes.

For more advice and guidance on how to prepare for Making Tax Digital, or to find out how we can support your business, call us on 01782 594958 or email Jennifer@www.thursfieldstax.co.uk