In order to bring the tax system into digital age, the government is introducing its Making Tax Digital (MTD) initiative in the near future.
Once fully implemented, the sysetm will require individuals and businesses to register, file and pay their taxes online through the system and also to update the information about their businesses through the system online.
VAT will move into the MTD system from April 2019, followed by other taxes from 2020. HM Revenue & Customs will be starting a live pilot in Spring 2018. Further details about the VAT reporting under MTD will be made available in early 2018.
The new MTD timetable is as follows:
- From April 2019, businesses with turnover above the VAT threshold will be required to keep digital records for VAT only.
- Until April 2020, businesses will not have to keep digital records or update HMRC quarterly for Taxes other than VAT.
- For smaller businesses, MTD will be made voluntary.
Despite MTD being delayed, adopting digital accounting and record keeping has many benefits and is advisable to be embraced before it becomes mandatory.
Early adopters will have no difficulty in embracing the MTD once it comes into effect. The benefits of digital accounting and record keeping include improved tax planning resulting in paying only the tax due and more transparent and easy management of finances and reporting.
We can help you in considering an appropriate accounting software that will help bring your tax affairs into digital age and more in line with MTD.