Making Tax Digital – Phase 2

HMRC has put Making Tax Digital for Business (MTDfB) back on the agenda in a big way by revealing an ambitious plan to introduce it to small firms starting in 2022.

Through MTDfB, HMRC aims to get all but the smallest of unincorporated businesses and private landlords (the self-employed) on to real-time record keeping. Under MTDfB, they will file regular updates of their income and expenditure using MTD-compliant software. This will happen at least quarterly.

The Government has an ambitious appetite to push on with the roll out of MTD, as follows:

– From April 2022 – the voluntarily VAT-registered (VAT-able turnover below £85K) will be required to digital tax service’ and move to keeping digital VAT records and submit VAT returns using MTD-compliant software.

-From the first day of their annual accounting period starting in the 2023/24 tax year, income tax requirements will apply to the self-employed with annual turnover above £10K.