Next Steps on the Finance Bill and Making Tax Digital
16th August 2017
The government has listened to concerns raised by parliamentarians, in particular the Treasury Select Committee, businesses and professional bodies about the pace of change and is taking steps to ensure a smooth transition to a digital tax system.
Making Tax Digital will help bring the tax system into the 21st century by providing businesses with a modern, streamlined system to keep their tax records and provide information to HMRC.
Under the new timetable:
- only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
- they will only need to do so from 2019
- businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
HMRC are fully committed to supporting businesses in this transition. HMRC has already begun piloting the Making Tax Digital services and will continue to do so with a wider, live pilot starting in Spring 2018. This will allow for well over a year of testing before any businesses are mandated to use the system which is coming into effect from April 2019.
If you’re looking to get ahead of the game, here at Stack & Jones we offer both Sage One and Xero in terms of cloud accounting. Please feel free to call and discuss any queries about how this change may affect you.
Information Provided by: Gov.uk