As part of the Government’s long-term tax digitisation plan, apparently designed to boost national productivity, make it easier for businesses and people to pay tax and reduce avoidable errors and fraud, MTD will continue and be gradually extended according to a recent announcement.
Broadly, at present businesses above the VAT threshold of £85,000 are covered by MTD, which requires them to keep digital records and provide VAT returns in and through Government-approved software.
From April 2022, the VAT MTD project will be extended to all VAT-registered businesses with turnover below the VAT threshold (£85,000), which presumably means not much change in law but a change in process for those affected businesses.
From April 2023, the MTD project will be massively extended into the world of income tax to taxpayers who file income tax self-assessment tax returns for business or property income over £10,000 annually. Presumably this is referring to turnover.
The Government statement suggests that the changes will make it easier for businesses to keep on top of their tax affairs! However, there was no detail as to precisely what the SA MTD system will require or involve. Intriguingly, the announcement makes reference ‘free software for businesses with the simplest tax affairs’.
The Government have announced this now to provide a long lead-in time to allow businesses, landlords and agents time to plan. It also gives software providers enough notice to bring a range of new products to market, including free software for businesses with the simplest tax affairs.
This is clearly a fundamental statement for many clients and we will keep you updated as matters develop so that you can plan what is required and communicate it to those affected.