Making Tax Digital is back on the agenda, with a new report recently published by HMRC sharing an update on its rollout to all VAT-registered businesses, plus landlords and self-employed traders over the next three years.
On 21 July, the Government set out their ambitious plans to “create a modernised digital tax system fit for the 21st century,” starting with the expansion of the current Making Tax Digital reforms.
Under the current Making Tax Digital for VAT guidelines, registered businesses must keep digital records and use software to submit their VAT returns digitally. This has been mandatory for businesses with a turnover of £85,000 or more since April 2019, with 1.4 million businesses already joining the programme. Businesses with turnover under £85,000 can also voluntarily register for Making Tax Digital. So far, over 30% of smaller VAT-registered businesses who are not yet required to use Making Tax Digital have done so.
Making Tax Digital updates announced:
The new report states that Making Tax Digital is to be gradually extended over the next few years, to help more businesses keep on top of their tax affairs and minimise mistakes that could be avoided. Plus, in light of the financial impact of the coronavirus pandemic, HMRC has noted that having a scheme like Making Tax Digital in place would help in times of crisis because they would have access to real-time tax information to deliver financial support to businesses who need it sooner.
From April 2022, the plan is to introduce Making Tax Digital to all VAT-registered businesses, which will include those under the current VAT threshold of £85,000.
Then, from April 2023, much smaller businesses and landlords who may only have one or two properties will be included, as MTD will also apply to taxpayers who file income tax Self Assessment tax returns for business or property income over £10,000 annually.
If you’re affected by the extended roll-out of Making Tax Digital, you have at least 20 months to start preparing for the changes. Remember, Making Tax Digital changes will affect the way that taxes are reported, not the level of tax that is collected.
Our team of experts have the skills to ensure your accounts are fully compliant and we are committed to helping local businesses migrate to Making Tax Digital as easily as possible. Please contact us at our Southend office on 01702 466 886 and we’ll provide the support you need to get started.
TBL Accountants are your local accountancy firm operating in Southend and across Essex. We specialise in a variety of services as personal, business, and charity accountants. Want to find out more? Get in touch with our team today.
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