Many businesses have welcomed the news that the Government will introduce a new scheme to…
HM Revenue & Customs (HMRC) has set out its plans for the future of the Making Tax Digital (MTD) programme, with confirmation of the timeline for the expansion of MTD for VAT and the introduction of MTD for Income Tax.
Since its introduction in April 2019, MTD for VAT has required most VAT-registered businesses with a turnover of £85,000 or more to keep digital records and to make VAT returns using HMRC-compatible software.
HMRC has now confirmed that all VAT-registered businesses will be subject to the rules from April 2022.
Meanwhile, HMRC has also confirmed that similar requirements will apply in respect of Income Tax for unincorporated businesses and landlords with gross incomes of £10,000 or more from April 2023.
Those affected will be required to make quarterly digital submissions setting out their income and expenses using HMRC-compatible software.
They will then receive estimated tax calculations, designed to make budgeting for tax bills easier than it is at present. Following the end of the year, they will be able to submit details of other income, with the intention that digital reporting will eventually replace self-assessment tax returns.
The move will not mean more frequent tax payments, although that could change in the future.
The Government has also confirmed that it will consult in the autumn on plans to extend MTD to cover Corporation Tax for companies.