On the 21st of July the Government published the first draft of the 10-year plan to modernise the tax administration system in the UK and the Making Tax Digital extension is a huge part of it.
Yes, Making Tax digital is firmly back on the agenda. Not that it really ever really went away. It’s just taken a back seat for a while with everything else that’s been going on this year.
But Making Tax Digital is happening. In fact, with the increasing use of technology, it’s seen as even more important now and for the future. The treasury have said it has ‘huge potential to improve the productivity of our economy, and its resilience in times of crisis’
To keep you updated I’ve summarised the main points and what the government have said about the Making Tax Digital extension.
Making Tax Digital extension summary
The headline is that Making Tax Digital will be extended to include:
- all VAT-registered traders from April 2022, and;
- most self-employed traders and individual landlords from April 2023.
There is no news yet on Corporation Tax but the Government have said they will publish a consultation document this Autumn.
What the Government have said about the Making Tax Digital extension
Since 2019, the vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) have been mandated to keep digital VAT records and send returns using Making Tax Digital (MTD)-compatible software.
From April 2022 these requirements will apply to all VAT-registered businesses.
MTD for Income Tax Self Assessment (ITSA) will apply from April 2023 for unincorporated businesses and landlords with total business or property income above £10,000 per year. Most businesses will have 2 years to prepare and test the service voluntarily prior to its introduction.
The next step is to extend MTD for VAT to all VAT registered businesses from April 2022. Over 280,000 businesses under the VAT turnover threshold have already joined voluntarily and are experiencing the wider benefits MTD can bring.
MTD for ITSA will apply from April 2023 for unincorporated businesses and landlords with total business or property income above £10,000 per year. Most businesses will have 2 years to prepare and test the service voluntarily prior to its introduction.
Help and support
If you need help with the Making Tax Digital extension or any other aspect of your Making Tax Digital contact me now.