Making Tax Digital – Next Steps

Making Tax Digital (MTD) for VAT was launched in April 2019. Hundreds of thousands of VAT-registered businesses above the VAT threshold (£85,000) are now recording and reporting their affairs digitally to HM Revenue & Customs (HMRC).

The rollout of MTD for VAT will now continue with all VAT-registered businesses required to meet the rules for digital taxation from April 2022, now that the initial soft-landing period has ended.

Businesses must now comply with MTD for VAT as they could face penalties if they are not, while those businesses required to report from 2022 need to start putting the necessary steps in place.

Below are the key dates for Making Tax Digital, to help you track your journey and ensure you are compliant with the changes ahead.

We know there is a lot to consider in the coming years, which is why our team have prepared a helpful guide, which has information on the various stages of Making Tax Digital and what you may need to report.

MTD for Income Tax

Originally, other forms of taxation, such as Income Tax and Corporation Tax, were meant to follow on from the requirements for VAT.

However, with businesses facing many challenges already, including the implications of Brexit and COVID-19 MTD for Income Tax will now be introduced from April 2024 at the earliest.

Under these new rules, self-employed businesses and landlords with annual gross business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2024, while general partnerships will need to comply with these rules from April 2025.

Further details of this next phase of MTD is expected in the coming year, but it is likely to mirror the existing VAT system, requiring taxpayers to submit information digitally using compliant software.

MTD for Corporation Tax

Not much yet is known about MTD for Corporation Tax as the Government is still consulting stakeholders.

The Government will provide businesses with an opportunity to take part in a pilot for Making Tax Digital for Corporation Tax though in the coming years, but will not mandate its usage before 2026.

Act now

MTD will require a far larger number of businesses and individuals, including those not registered for VAT, to eventually report their affairs digitally quarterly, this includes sole traders with income from one or more business, as well as income from letting UK property.

It is now imperative that businesses prepare themselves for future changes and that VAT-registered businesses continue to comply with the current digital tax rules.

This includes using the correct online accounting software and processes that are compliant with the ever-changing MTD regime.

If you would like help preparing for MTD or are struggling with the complexities of the current VAT regime, please contact us.