The Government announced its vision for modernising the tax system at the March Budget 2015 with the Making Tax Digital (MTD) initiative.
The aim of the initiative is to make tax administration more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system.
What does this mean for your business?
By 2020, most businesses, self-employed people and landlords will be required to keep their business records digitally and send these to HMRC on a quarterly basis.
However, these changes will be gradually introduced starting as close as 2018.
- From April 2018, all landlords and businesses with a turnover above the VAT threshold (currently £85,000) will have to send business information digitally and quarterly to HMRC.
- From April 2019, those with a turnover above £10,000 will be required to make these quarterly submissions. Expands to cover VAT Reporting too.
- From April 2020, Corporations and Partnerships with an annual turnover of £10m will be enrolled in this process.
The Government has already pledged to remove the smallest businesses, self-employed people and landlords from the scope of the changes by exempting all those with annual turnover of less than £10,000 from digital record keeping and quarterly updates (although they can still choose to enroll on a voluntary basis).
How does Making Tax Digital work with your accountant?
The Making Tax Digital process for agents is still being refined by HMRC. What we know now is that agents will be required to register for Agents Services to allow them to act on behalf of their clients.
Guidance will be available as soon as we have the full end to end process from HMRC.
Contact Hobday-Stevens at firstname.lastname@example.org or call 01457 237007 to discuss the changes.