HMRC have released their latest consultation documents on Making Tax Digital (MTD). They have confirmed it will be starting in April 2018.
But what is MTD?
Making Tax Digital is HMRC’s initiative to move business bookkeeping online. They want most businesses and self-employed individuals to report their income quarterly. They will also require payment of any tax due every 3 months.
The reporting will be made via an app or an accounts software package.
Accounting information is currently reported via an annual tax return. This annual tax return is to be replaced by 5 returns per year. One every quarter, and a final summary to confirm end of year figures.
Who this applies to
At this stage the legislation only applies to sole traders, landlords and partnerships. However, it’s expected that the government will announce limited companies will need to comply in the future. They are expected to join in 2020.
Are there any exemptions from needing to comply?
The latest documents from HMRC confirm that businesses and landlords with income of less than £10,000 will be exempted from MTD. There may also be deferred start dates for some smaller businesses. This is still under review.
How is the information sent to HMRC?
If you’re a customer at Woodville, don’t worry, we have it all in hand.
Our software partners are on HMRC panels and are currently beta testing the new system. We are also applying to be testing partners with HMRC direct. So when it comes into force, you can be confident it’s all correct.
Do you have any further reading?
HMRC have released some initial documents which you can download here –
You can also sign to our mailing list here. We will send you information as we receive it.