Businesses now to use the MTD system after April 2019.
Businesses will not be compelled to use the Making Tax Digital (MTD) system until April 2019 and then only to meet their VAT obligations, the Treasury has announced. This will apply to businesses that have a turnover above the VAT threshold. The smallest businesses will not be required to use the system, although they can do so voluntarily.
Mel Stride, Financial Secretary to the Treasury, said the government had listened to concerns about the pace of change and was taking steps to ensure a smooth transition to a digital tax system.
The Treasury stated that, under the new timetable:
- only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes;
- they will only need to do so from 2019; and
- businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
MTD will be available on a voluntary basis for the smallest businesses, and for other taxes. As a result, businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system. Further, since VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than now.
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.