Following the announcement of a snap general election to take place on 8 June 2017, the Government dropped clauses relating to Making Tax Digital from the Finance Bill 2017 so that it could quickly receive approval from MPs before Parliament dissolved. The policy is now on hold until after the election.
While Making Tax Digital is currently on hold, the Government has said that the clauses dropped from the Finance Bill remain policy and it intends to put forward legislation at the start of the new Parliament to enact them.
We will update this page as details of any new legislation are announced after the election.
As part of its Making Tax Digital policy, HM Revenue and Customs (HMRC) has said most businesses will be required to use software and apps to keep their records and to update HMRC, on a quarterly basis, by 2020.
The Making Tax Digital ‘Road Map’, first published in December 2015, outlining the governments vision for a completely digital tax system can be found here.
Making Tax Digital signifies a huge change for most businesses, some of whom do not have high levels of digital proficiency, which is why our team of experts here at George Hay Chartered Accountants will be on hand to provide comprehensive support and advice throughout the transition and beyond.
We offer support for cloud based accounting packages and moving online is likely to make the transition to providing digital tax information much easier. Full details of our online accounting services are available here.
The consultations on Making Tax Digital were issued in August 2016 and HMRC responded to these in January 2017.
The key points addressed in the first wave of consultations were as follows:
- HMRC will begin moving businesses to Making Tax Digital from 2018.
- Businesses will have to report to HMRC on a quarterly basis, but will not have to pay tax on a quarterly basis.
- HMRC is consulting on the introduction of voluntary pay-as-you-go tax payment.
- HMRC will not provide any software itself but has said that free packages will be made available.
- Businesses with an annual income of £10,000 per annum, or less, will be exempt from the changes.
Spring Budget 2017
At Spring Budget 2017 the Government announced that, for unincorporated businesses and landlords with turnovers below the VAT threshold, it would defer the mandating of Making Tax Digital for Business (MTDfB) for one year, pushing it back to 2019. This means that around 3.1 million of the smallest businesses will have more time to prepare for the switch to digital record-keeping and making quarterly updates to HMRC.
This also means that only those businesses, self-employed individuals and landlords with turnovers in excess of the VAT threshold, with profits chargeable to Income Tax and that pay Class 4 National Insurance contributions, will be required to start using the new digital facilities from April 2018.
More details relating to this announcement can be found here.
Further details about how Making Tax Digital will operate and how it will affect other types of business including limited companies, as well as individuals, will likely be published in due course.
We will update this page as and when new information is made available, or when we think there is something important that you should know, so please check back regularly.