HM Revenue & Customs (HMRC) has confirmed that Making Tax Digital (MTD) will be extended to all VAT-registered businesses from April 2022.
The change forms part of the Government’s digital tax drive, which will eventually see all kinds of tax reported and paid using digital accounting software.
Under current rules, businesses whose turnover is above the VAT threshold of £85,000 are required to keep digital records and provide VAT returns through specialist digital systems.
But from April 2022, MTD will be extended to all businesses who charge VAT, including those earning less than the VAT threshold but are voluntarily registered for the tax.
And from 2023, MTD will be further extended to all taxpayers who file self-assessment tax returns for business or property income worth over £10,000 annually.
Commenting on the announcement, HM Revenue & Customs (HMRC) said digital tax systems – currently used by 1.4 million VAT-registered businesses – help reduce costly errors and mistakes.
“The long lead-in time will 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,” said HMRC.
“Over 30 per cent of smaller VAT-registered businesses, who are not yet required to use Making Tax Digital, have chosen to do so voluntarily because of the wider benefits the digital tools offer, including fewer errors and increased productivity.”
For help and advice on matters relating to VAT and Making Tax Digital, contact our expert team today.
Smailes Goldie Group
Latest posts by Smailes Goldie Group (see all)
- What is RTI for Payroll? - June 11, 2021
- OTS to consider “benefits and implications” of moving tax year end date - June 10, 2021
- Now is the time to prepare details of your taxable benefits - June 9, 2021