Budget 2017 – Making Tax Digital

The previously announced “Making Tax Digital”, which will fundamentally change the way taxpayers report their income/expenditure to HMRC is due to be introduced in April 2018.

The system will require taxpayers to report their income/expenditure on a quarterly basis by using their own secure online digital tax account.  The idea is that the tax system operates much more closely to real time and there will be less risk of errors in the system, which reportedly cost the government over £8 billion a year.

A welcome delay was announced today however, for smaller businesses who will now have a further twelve months to prepare for quarterly reporting under “Making Tax Digital”.

Previously all unincorporated businesses with turnover over £10,000 were to be required to use the digital service from April 2018.

A twelve month delay for those businesses with turnover under the VAT threshold will be very welcome news for many smaller businesses, who will now not be required to use the digital service until April 2019.

The introduction dates are now as follows:

April 2018

Unincorporated businesses and landlords with turnover in excess of the VAT threshold

April 2019

Unincorporated businesses and landlords with turnover below the VAT threshold

April 2020

All incorporated businesses and landlords

Businesses and landlords with turnover under £10,000 are exempt from these requirements, however those in employment who have secondary income of more than £10,000 per year will not benefit from this exemption.

If you would like to discuss your options and prepare for “Making Tax Digital”, please get in touch with your usual contact.

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Feb 20

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