Treasury sets out next steps for Making Tax Digital
The Treasury has set out the next steps in its plan to extend Making Tax Digital (MTD) to all businesses and those taxpayers that file self assessment returns.
Currently, businesses above the VAT threshold of £85,000 are required to comply with Making Tax Digital for VAT (MTD for VAT).
From April 2022 the initiative will be extended to all VAT-registered businesses, including those with turnover below the VAT threshold. From April 2023 MTD will apply to taxpayers who file income tax self-assessment tax returns for business or property income over £10,000 annually.
According to the Treasury, the MTD changes will affect the way that taxes are reported, not the level of tax that is collected. They will help to minimise avoidable mistakes, which cost the exchequer £8.5 billion in 2018/19.
Jesse Norman, Financial Secretary to the Treasury, said:
‘We are setting out our next steps on MTD… as we bring the UK’s tax system into the 21st century. MTD will make it easier for businesses to keep on top of their tax affairs. But it also has huge potential to improve the productivity of our economy, and its resilience in times of crisis.’
Kevin Parsons, managing director of Cooper Associates Accountants, said:
‘It was inevitable that the change announced by the Treasury was going to happen, thus bringing all VAT registered businesses in line under Making Tax Digital. The move for clients to submit VAT returns through cloud software has worked well and that will continue as it is rolled out to more businesses.
The proposal for all individuals to report through MTD will have massive consequences to all small business owners, increasing their administration burden that many already struggle to cope with. Cooper Associates Accountants is here to help provide a solution. We have a number of clients who have actually saved lots of time by transitioning to cloud accounting. We would be delighted to discuss how this works with any business owners who are concerned about the changes. Although April 2022 feels like a long way in the distance, many businesses can benefit from transferring to a cloud solution sooner.’
Please contact Cooper Associates Accountants by calling 01823 218550 or email email@example.com if you would like further information.