Making Tax Digital
I am sure you have all heard in the news of a new, revolutionary and supposedly more efficient tax reporting system being introduced by everyone’s favourite government department. Of course I am talking about Making Tax Digital.
Making Tax Digital, or MTD for short, is simply a new tax system dreamt up by HMRC with the aim to bring about the end of self assessment from April 2018. The main aim of MTD is ultimately to make tax collecting easier and more effective and will apply to nearly all taxpayers, whether self employed, a landlord or a limited company. The only ones who will escape will be those with turnover below a certain level, which is currently believed to be £10,000.
Your start date for MTD will vary depending on the trading style under which you operate. The generalised timeline is as follows –
April 2018 –self-employed individuals, partnerships and landlords with turnover above the VAT registration threshold.
April 2019 –self-employed individuals, partnerships and landlords with turnover between £10,000 and the VAT registration threshold.
April 2019 – the current online VAT reporting system will cease and VAT will need to be reported through the new MTD system.
April 2020 – all limited companies who pay corporation tax.
It will be mandatory that all records are kept electronically, with all information being reporting to HMRC quarterly instead of once at the end of the tax year.
At this moment in time the final details are still being confirmed, so we await confirmation as how it will work and will advise everyone accordingly. In the meantime, this is something which everyone needs to start to prepare for in advance of April 2018.