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TAX Digital next steps

Following the feedback from the Making Tax Digital consultations, the government announced at Budget 2017 that it will provide 3.1 million small businesses and landlords and their agents with an extra year to prepare before they are required to keep digital records and send HMRC quarterly updates. Businesses that have an annual turnover below the VAT registration threshold will not be required to start keeping digital records and providing quarterly updates until April 2019, although they can choose to do so voluntarily.

Tax Digital will be introduced gradually

These changes are therefore being introduced gradually, starting in 2018 with Income Tax for businesses, self-employed people and landlords with the annual turnover above the VAT threshold. In 2019-20 we will extend the Income Tax elements of Making Tax Digital to all businesses, self-employed people and landlords with the annual turnover above £10,000. We will then move on to VAT (2019) and Corporation Tax (2020). We will thoroughly pilot these changes with businesses from April, starting slowly and ramping up to hundreds of thousands, before rolling them out. This will ensure the software is user-friendly and gives individuals and businesses time to prepare and adapt. Free software will also be available for businesses with straightforward tax affairs.

Turnover is less than 10K are exempted from Tax Digital

The government has already pledged to remove the smallest businesses, self-employed people and landlords from the scope of the changes by exempting all those with the annual turnover of less than £10k from digital record keeping and quarterly updates (although they can still choose to enroll). This was in addition to those who were already removed from the scope by the exemption for those with secondary income below £10,000.

Exempt from Tax Digital if it is not genuinely an option.

The government also recognizes that for some, digital is genuinely not an option and where this is the case, an alternative will be provided.

HMRC will continue to engage with stakeholders as it implements these changes to ensure they are straightforward and easy to use.

If you are affected by Tax Digital requirement and need any help, please do not hesitate to contact us

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