Making tax digital (MTD) is a new tax administration system that HMRC are introducing, with the stated aim “to make it easier for individuals and businesses to get their tax right and keep on top of their affairs“. Most commentators, however, see it as more red tape, perhaps with the possible medium term consequence of bringing forward tax payment dates.
MTD will apply to businesses and landlords, who will now be required to:
- Keep their book keeping records digitally (ie, spreadsheet, on premise book-keeping software or cloud hosted book-keeping software),
- Make quarterly, as well as annual, electronic submissions (summarising total income and total expenses) to HMRC.
MTD will have a phased introduction:
- April 2018: Landlords and unincorporated businesses with annual turnover over the VAT threshold (currently £83,000 pa, rising to £85,000 pa wef 1-Apr-17),
- April 2019: Landlords and unincorporated businesses with annual turnover between £10,000 pa and the VAT threshold,
- April 2020: Companies.
This new submission process will be similar to the current VAT return completion and e-submission process, so those who already have computerised book keeping systems and who are already VAT registered will see little change. For those who are not, you will need to put in place a new book-keeping system. Speak to us for more detail on MTD, what solutions might work for you or even how you may outsource all or part of the process.