The Government has released it’s reformed timetable to inform businesses about the implementation of Making Tax Digital.
The announcement was confirmed by ministers as they set out the next steps for the Finance Bill. Listening to concerns raised by several professional bodies and businesses, regarding the pace of change and ensuring a smooth transition to a digital tax system.
The aim of making tax digital is to modernise our tax system, streamlining records and the information provided to HMRC by businesses. The announcement confirms delays to the new system to provide businesses with enough time to adapt to these changes. Former Chancellor George Osborne has revealed that annual self-assessment will come to an end by 2020, as highlighted in his 2015 Autumn Statement.
Small businesses are encouraged to file figures quarterly, when the changes to come to light these will then be second nature, rather than something that people struggle with yearly. VAT registered businesses will be amongst the first to work with the new system in 2019. Those with a turnover above the VAT threshold (which currently stands at £85,000) will be required to keep digital records and only for VAT purposes.
The changes to the timetable may come as a relief to many small business owners, yet the changes will be implemented eventually so it’d be an idea to familiarise yourself with the proposed new system now and get your accounts digitised.
3Mil Businesses can go digital at their own pace
The Treasury has accepted the need to loosen the rigidity of the timetable, whilst still fully supporting the initiative to make tax digital and modernise the tax system. Three million of the smallest business owners and landlords will now be given the option to voluntarily make the switchover to digital record keeping, to allow them to do so at their own pace, before this becomes mandatory.
Mel Stride, Financial Secretary to the Treasury and Paymaster General commented;
“Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms. We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.”
Businesses and landlords will have at least two years before the new system is fully implemented, allowing time for adapting to making tax digital.
Commenting on the announcement that Making Tax Digital mandation will only be for VAT registered businesses above the VAT threshold until April 2020 at the earliest, Anthony Woodings, President of ICAEW Manchester and from Hurst Accountants in Stockport, said:
“It’s great that the Government has listened to both the voice of business and the profession on Making Tax Digital (MTD). Removing mandation for the smallest businesses is a welcome step forward and is one less regulatory burden for SMEs to worry about. We now look forward to working closely with HM Treasury and HMRC on creating a world-class digital tax system that businesses of all sizes will want to use.”