How will your business be affected by Making Tax Digital?Source: HM Revenue & Customs | | 22/06/2017
The introduction of Making Tax Digital (MTD) will fundamentally change the way companies, the self-employed and landlords interact with HMRC. The new regime will require businesses and individuals to register, file, pay and update their information using a new online tax account.
The new regime is due to start next April when the self-employed (including property landlords), with turnover in excess of the VAT registration limit - currently £85,000 - will need to upload quarterly data to HMRC. This will in most cases replace the current requirement to file a Self Assessment tax return.
The introduction of MTD was first announced as part of the March 2015 Budget measures and is expected to see HMRC move towards a fully digital tax system by 2020.
However, there have been concerns that the roll-out of MTD is moving too fast. These concerns have been exacerbated by the calling of the snap general election and the removal of critical, enabling legislation from the Finance Bill 2017. It still remains to be seen if the plans for the introduction of MTD will be delayed.
The Chancellor has previously announced a one year deferral for unincorporated businesses and landlords with turnover below the VAT threshold. For this group, the implementation date is therefore April 2019.
The current, expected implementation dates are:
- April 2018 - self-employed tax payers with profits chargeable to Income Tax and Class 4 National Insurance Contributions (NICs) and with turnover in excess of the VAT threshold;
- April 2019 - self-employed tax payers with profits chargeable to Income Tax and Class 4 National Insurance Contributions (NICs) and with turnover below the VAT threshold;
- April 2019 - businesses registered for VAT;
- April 2020 - businesses and other organisations if they pay Corporation Tax.
The first issue that affected business tax payers will need to address is the selection of suitable accounting software, as it is only possible to make the required uploads of data by using approved systems. We can help, by recommending software solutions,
and by helping you implement and bed-in the necessary changes. Please call so that we can discuss your options while there is still time for sensible planning to meet these challenges.