What’s Making Tax Digital?

Making Tax Digital is HMRC’s plan to bring UK tax into the digital age. In a nutshell, nearly every UK business will be affected.

  • Tax returns will have to be submitted digitally through an MTD-compliant software. Tax submissions by post or through HMRC’s website will be phased out.
  • All business-related transactions will have to be recorded digitally using MTD-compliant software or apps.

 

Find out when Making Tax Digital affects you:

April 2019: VAT (phase 1)

Who’s affected? VAT registered businesses with turnover above the VAT threshold (currently £85,000 excluding VAT).

 

How?

  • MTD-compliant software or apps will have to be used to keep a digital record of VAT transactions
  • MTD-compliant software or apps will have to be used to submit VAT returns
  • Submitting VAT returns using HMRC’s own VAT online services (currently accessed by logging on to HMRC’s site) will no longer be possible

 

April 2020: VAT (phase 2)

Who’s affected? The remaining VAT registered businesses – those voluntarily VAT registered with VAT-able turnover under £85,000.

 

How?

  • MTD-compliant software or apps will have to be used to keep a digital record of VAT transactions
  • MTD-compliant software or apps will have to be used to submit VAT returns
  • Submitting VAT returns using HMRC’s own VAT online services (currently accessed by logging on to HMRC’s site) will no longer be possible

 

April 2020+: Corporation tax & self-assessment

Who’s affected? Sole-traders, partnerships, landlords and trading companies. (The start date will be confirmed by the government following the successful roll out of Making Tax Digital for VAT.)

 

How? It’s likely that:

  • MTD-compliant software or apps will have to be used to keep a digital record of financial transactions
  • MTD-compliant software or apps will have to be used to submit quarterly updates to HMRC for both income and corporation tax purposes