What is Making Tax Digital?
Starting in April 2019, the government's new Making Tax Digital (MTD) initiative will see important changes to the way in which businesses report their VAT information to HMRC.
MTD doesn't change what you submit to HMRC, it changes how you submit it.
MTD aims to provide businesses the ability to keep records of their income and expenditure digitally, and to send VAT summary updates to HMRC from their software. In turn this will provide a more timely, efficient and simpler tax system, reducing the likelihood of errors and giving businesses more certainty of their position throughout the year.
Who is Affected?
From April 2019, VAT registered businesses (including self-employed and landlords) with turnover above the VAT registration threshold (currently £85,000) will have to:
- keep their records digitally (for VAT purposes only)
- provide their VAT return information to HMRC through Making Tax Digital compatible software
Smaller businesses will not be required to use the system, although they can do so voluntarily.