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Making Tax Digital - latest timetable

- 12:19 pm - April 4th, 2017


"Making Tax Digital" is the new UK Government initiative to move to quarterly reporting and online reporting.  Here's the original timetable for implementation

Screen-Shot-2015-12-14-at-07.39.59-550x420.pngIMPORTANT: On 13th July 2017 HMRC published a new, delayed timetable.  Please check the summary here.  The timetable outlined below has been superseded by this new information.

 

Early in 2016 HMRC published a paper called "Making Tax Digital". In it, the strategy from now until 2020 is set out, highlighting the fact that all tax is going online, is going to more frequent reporting, and heralding the end of the tax return as we know it.  Our earlier news article sets out the main principles and what it means.  Starting in 2017, and due to complete in 2020, all of us will be affected by Making Tax Digital (MTD) - or, to give it its full title, Making Tax Digital for Business (MTDfB).

In the Spring 2017 budget the timetable for implementation was changed. Here we're summarising the latest timetable, and when it might affect you.

  • April 2017 - trials of the new system begin. HMRC are expecting to have hundreds of people trialling the new systems.

From 2018 on it's rolled out in earnest;  The Making Tax Digital for Business timetable for all businesses trading over £10,000 is:

  • April 2018: If you have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs), and have turnover above the VAT registration threshold (£85,000 from 1st April 2017).  In other words, sole traders and unincorporated businesses with income above £85,000.  You'll start using the MTD processes from April 2018.
  • April 2019: if you are registered for and pay VAT; or have profits chargeable to Income Tax and pay Class 4 National Insurance contribution with turnover below the VAT threshold.  You'll start using the MTD systems for all VAT reporting, for income tax and NICs purposes
  • April 2020: if you pay Corporation Tax (CT), you'll need to use the MTD processes for reporting CT.

Once MTD applies to you, you'll be required to submit an update once per quarter, followed by an annual submission.  We'll know more about the requirements in the summer of 2017, when legislation will be introduced in a Finance Bill 2017 that will set out:

  • Digital Record Keeping - how to keep records of trading and transactions digitally, and categorise expenses with help from prompts and guidance in the software.
  • Establishing Taxable Profit - how MTD would help establish taxable profit. In particular, exploring when businesses (including self-employed and landlords) should record accounting and tax adjustments for the purposes of arriving at a taxable profit and how businesses should reflect reliefs and allowances.
  • Providing HMRC with updates - how businesses (including sole traders and landlords), would provide HMRC with quarterly updates under MTD. In particular, the level of detail the updates must contain, the time periods the updates cover, and when they should be submitted.
  • ‘End of Year’ Activity - how businesses might finalise their taxable profit for a period, including the activity they may need to undertake and how long they should have to do so.