Making Tax Digital

Following the announcement of a snap general election to take place on 8 June 2017, the Government dropped clauses relating to Making Tax Digital from the Finance Bill 2017 so that it could quickly receive approval from MPs before Parliament dissolved. The policy is now on hold until after the election.

While Making Tax Digital is currently on hold, the Government has said that the clauses dropped from the Finance Bill remain policy and it intends to put forward legislation at the start of the new Parliament to enact them.

We will update this page as details of any new legislation are announced after the election.

As part of its Making Tax Digital policy, HM Revenue and Customs (HMRC) has said the majority of businesses will be required to use software and apps to keep their records and to update HMRC on a quarterly basis.

Making Tax Digital is set to be a significant change for most businesses which is why our team at Nicklins will provide extensive support with the transition.

We already offer full support for the Xero, Quickbooks On Line and SageOne online accounting packages and we believe that moving to an online accounting package now is likely to make the transition to the Digital Tax system much easier. Full details of our online accounting offering are available here.

The latest developments

Since HMRC published the outcomes of the first consultations on Making Tax Digital, further information has been published at the Chancellor’s Spring Budget and in an HMRC Policy Paper.

Crucially, this includes the timetable for the introduction of Making Tax Digital. The requirement for businesses, self-employed people and landlords will begin from:

  • April 2018 if they have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs) and their turnovers are in excess of the VAT threshold
  • April 2019 if they have profits chargeable to Income Tax and pay Class 4 NICs and their turnovers are below the VAT threshold
  • April 2019 if they are registered for and pay VAT
  • from April 2020 if they pay Corporation Tax (CT)

HMRC consultations:

The first set of consultations announced by HMRC concern unincorporated small businesses.

The key points from the first wave of consultations are:

  • HMRC has confirmed that it will begin moving businesses to Making Tax Digital from 2018.
  • Businesses will have to report to HMRC on a quarterly basis, but will not have to pay tax on a quarterly basis.
  • HMRC is consulting on the introduction of voluntary pay as you go tax payment.
  • HMRC will not provide any software itself but has said that free packages will be made available.
  • Businesses with an annual income of £10,000 a year or less will be exempt from the changes.

Further consultations will be published in due course, which are likely to give further details of how Making Tax Digital will affect other types of business, including limited companies, as well as individuals.

We will update this page as further consultations are published, so please check back regularly.

Latest HMRC updates