Further to LB Groups‘ Making Tax Digital Factsheet we recently sent you, in the email we mentioned that the current proposed MTD changes were subject to change due to the political/economic environment.
As of yesterday (13 July 2017) ministers have confirmed a new timetable for Making Tax Digital and have delayed rollout by ‘at least’ two years until 2020, although quarterly VAT reporting using the system will be mandatory from 2019.
The original plan from the government and HMRC would have meant the smallest businesses and sole traders would need to start quarterly reporting from April 2017, now those below the VAT threshold (currently £85,000) will be exempt from requirements to quarterly report until the government have reassessed the plans.
Under the new timetable:
- businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records but only for VAT purposes
- they will only need to do so from 2019
- 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.
As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
Ministers also confirmed that the Finance Bill will be introduced as soon as possible after the summer recess. “This will legislate for all policies that were included in the pre-election Finance Bill, raising over £16 billion across the next five years to fund our vital public services.”
The government has also re-confirmed that all policies originally announced to start from April 2017 will be effective from that date.
Please Contact Us for further information about these changes