This time next year, elements of the Government’s Making Tax Digital scheme will be in the process of being trialled.
It’s envisaged that by April 2018, the scheme, which is aimed at modernising the UK tax system by moving it online, will have started to take effect for VAT payments as part of a pilot test. It’s anticipated that Income Tax will follow after 2020.
From April 2019, it will be compulsory for businesses that are above the VAT threshold to keep their records digitally and provide HMRC with quarterly VAT updates.
As with all major initiatives of this scale, the guidelines surrounding Making Tax Digital are being frequently revised, with new details being released by HMRC on a regular basis. Here’s an overview of the latest updates:
- Businesses with a turnover greater than £85,000 will need to keep digital records from 2019 for VAT purposes
- Businesses with a turnover greater than £85,000 will only be expected to report data quarterly for the purposes of VAT from April 2019. For other taxes, this will be 2020 or later.
- Businesses/landlords with a turnover less than £85,000 can keep digital records and report quarterly to HMRC on a voluntary basis.
- Businesses that are VAT-registered, but are below the VAT threshold will not have to produce quarterly updates or keep digital records, although they can do this voluntarily.
Making Tax Digital is a key part of the Government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. While the scheme will apply to all businesses above the VAT threshold, smaller businesses will not be required to use it, although they can choose to use it on a voluntary basis.
For more details about the scheme visit here.
If you would like to discuss the implications of Making Tax Digital or the latest updates on your business or would like more details about the scheme, contact Mike Brown, Software Support Manager, on 01905 777600 or email@example.com.