What is it?
Phase 2 of HMRC’s Making Tax Digital (MTD) programme will soon be with us. The initiative is fundamentally changing UK tax reporting systems and processes for businesses and individuals.
In HMRC’s eyes, MTD is all about providing a more modern, digital service that makes it easier for businesses to get their tax right the first time – reducing the level of lost due to avoidable errors. It is also badged as beneficial for taxpayers, in reducing the cost, uncertainty, and concerns that businesses face when HMRC is forced to intervene to put things right. So, better and more up to date reporting, leading to less HMRC queries.
Upcoming changes
The initial focus of the programme was VAT. The MTD programme for VAT had two implementation phases:
• Most VAT-registered businesses with turnover over the VAT registration threshold (£85,000) were required to meet the April 2019 phase one reporting deadline.
• As of April 2022, all VAT-registered businesses are required to engage with MTD for VAT.
The next focus of MTD will be income tax:
• Any unincorporated trader or property landlord with gross income in excess of £10,000 will be required to make quarterly MTD submissions starting in April 2023.
• To support this, there will be an extensive pilot run by HMRC starting in April 2021.
The final focus area of MTD will be corporation tax:
• HMRC has confirmed this will not occur before April 2026.
• A pilot to support the mandate is expected to start in April 2024.
If you would like a more detailed understanding of MTD in the context of your business, why not contact our tax team on 01788 539000 or email [email protected].