Making Tax Digital (MTD)
The government plans to move to a fully digital tax system by 2020 so you will no longer need to submit annual tax returns. The Making Tax Digital system will collect your tax data in digital format. Taxpayers will be able to see all their tax information in one place.
Four principles have been laid down by HMRC in their process of removing the need for the filing of tax returns.
1. Tax simplified - No duplication of information.
2. Tax in one place - All tax data in one place, the "digital account" and various taxes can be netted off against each other.
3. Businesses - HMRC will be digitally updated by businesses on a quarterly basis to enable interim tax calculations.
4. Individuals - Enabling individuals to see their whole tax situation in one place and providing digital interaction with HMRC.
Making Tax Digital - Time Line
The timeline for Making Tax Digital is a movable feast at the moment, so revisit this page for updates.
- MTD Pilot (Jan to Jun 2017)
Consultation and testing starts for collecting property letting and other income. New online HMRC billing system starts.
- Digital Tax Accounts (Jul - Dec 2017)
Digital tax accounts show all tax liabilities in one place. Automated tax code adjustments for PAYE.
- Digital Tax Accounts (Jan - Jun 2018)
Interest paid by banks and building societies begin to be shown in tax accounts.
- Quarterly Reporting (Jul-Dec 2018)
The self-employed, businesses and landlords with turnover above the VAT Threshold (currently £85,00 from 1 April 2017) will begin providing HMRC quarterly with National Insurance and Income Tax using "ACCOUNTING SOFTWARE". What this accounting software should be is still under development.
- Going Main Stream + VAT (2019)
The self-employed, businesses and landlords with turnover between the minimum MTD threshold £10,000 and the VAT Threshold (currently £85,00 from 1 April 2017) will begin providing HMRC quarterly with National Insurance and Income Tax using "ACCOUNTING SOFTWARE". MTD also starts for VAT.
- MTD is the Norm (2019)
By 2020 most self-employed, businesses and landlords will be required to provide HMRC on a quarterly basis .
A full range of services will be available through HMRC digital tax accounts