Following concerns raised by the Treasury Select Committee, industry bodies and businesses, the Government has revised the timetable on Making Tax Digital for Business (MTDfB). The changes will now commence from 2019 for businesses which have a turnover which exceeds the VAT threshold. The decision has been made to further ease the transition for businesses into MTDfb and the digital tax account. The changes are not only on the timeline, but also on how taxpayers report income to HMRC, such that they will be required to keep digital records through software and file quarterly through their digital tax account.
The government has confirmed that under the new timetable, which is expected to impact more than 3m small businesses, self-employed and property landlords, the following will apply:
1. Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes.
2. They will only need to do so from 2019.
3. Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
Making Tax Digital will be available on a voluntary basis for the smallest businesses and for other taxes. This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
Mel Stride, Financial Secretary to the Treasury and Paymaster General said “Businesses agree that digitising the tax system is the right direction of travel… We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.”
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