We’ve covered what Making Tax Digital means at the moment in our previous posts, in this one we are looking towards the future and what MTD will become.
HMRC have launched a pilot to accept quarterly updates from sole traders with income from only one business and landlords with simple tax affairs.
In practice this means individuals opting out of the current self-assessment system and submitting reports to HMRC quarterly.
To join the pilot taxpayers must be able to keep digital records of income and expenses. They must also send income tax updates to HMRC on a quarterly basis using MTD-compliant software, instead of filing a self-assessment return once a year.
Unfortunately at the moment, there are only 4 software providers that are on HMRC’s list of compliant software. This means the reality of anyone signing up for the pilot is quite low!
Moving forward we know that MTD for VAT comes into place April 2019, but beyond that the details are fairly foggy. The HMRC statement around what comes next is helpfully vague;
“The government has committed that it will not widen the scope of Making Tax Digital for Business beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.”
What we believe is coming is quarterly electronic submissions for both corporation tax and personal tax using approved software. We are encouraging all our customers to start planning for this and looking at their software options now to ease any transition that is coming.
At this point all we can say is watch this space, and as soon as we have more information we will bring you updates!