Making Tax Digital: at a glance

HMRC’s flagship Making Tax Digital (MTD) programme has seen many stops and starts over the years. Where are we now?

VAT: the initial easement, meaning full digital links did not have to be in place, expired for VAT return periods starting on or after 1 April 2021. Businesses now need to be fully compliant with the new rules. We can provide guidance on what does and doesn’t constitute a digital link, in cases of doubt. From April 2022, MTD for VAT applies to all VAT registered businesses, even voluntary registrations.

Corporation tax: mandation is not expected before 2026, with a pilot from 2024.

Income tax self assessment: MTD rules apply from 6 April 2023 for unincorporated businesses and landlords with total business or property income more than £10,000 per year. HMRC had intended to expand its pilot scheme substantially from April 2021, allowing entry to the vast majority of sole traders and landlords. This has not happened. It is now pushed forwards to April 2022, whittling away the two-year period to trial the system. Given the considerable demands of the new rules, which involve filing quarterly summaries of business income and expenses via MTD-compatible software, plus an end of year finalisation, we recommend making an action plan for your business now. Please contact us to discuss what is needed to comply.