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
