Making Tax Digital (MTD) will introduce extensive changes to how taxpayers have to record and report information to HMRC. Under MTD businesses will be required to maintain their records digitally using either accounting software or apps. They will have to report summary information to HMRC quarterly and an end of year statement through their digital tax accounts.
Unincorporated businesses were going to be the first to have to report under MTD but the government has announced a delay in its introduction. From April 2019 businesses with a turnover above the VAT threshold of £85,000 will have to keep digital records and only for VAT purposes. Businesses will not have to report under MTD for other taxes until at least April 2020.
These changes mean that businesses and landlords with turnovers under the VAT threshold will not have to move to the new digital system.
These changes are to be welcomed but businesses with turnover the VAT threshold need to be checking whether their accounts software will be able to cope with the new reporting requirements.