HMRC's vision to digitalise the UK tax system is well underway. The transformation will start with Making Tax Digital (MTD) for VAT from April 2019.
Page last updated
17 October 2018
After MTD for VAT has been implemented, MTD for income tax (for the self-employed and those with income from property) and MTD for corporation tax are expected to follow, but not before April 2020 at the earliest. HMRC is also running an MTD for individuals transformation project.
The essential elements of MTD are:
Businesses and organisations (which includes those with income from property) will be required to maintain digital accounting records. Maintaining paper records will cease to meet the legal requirements in tax legislation
Businesses and organisations will be required to use a functional compatible software product to submit their returns to HMRC. The software will use HMRC’s API (Application Program Interfaces) platform to submit information to HMRC. The current HMRC online tax return services will be withdrawn for those within the scope of the MTD rules.
Timeline for MTD
From April 2019: Impacts VAT reporting by all VAT registered businesses and organisations (including sole traders, partnerships, limited companies, non-UK businesses registered for UK VAT, trusts and charities) with turnover above the VAT threshold. HMRC has announced a 6 month deferral to the start date for some more complex businesses.