The government has delayed its Making Tax Digital (MTD) plans for an estimated three million small businesses and landlords.
MTD will initially be a voluntary scheme, so businesses with an annual turnover below the VAT threshold (currently £85,000) will be able to choose when to move to the digital accounting system.
Under the new timetable outlined by HMRC:
- From 2019, only businesses with a turnover above the VAT threshold will have to keep digital records (for VAT purposes only).
- For other taxes, businesses and landlords will not be required to keep digital records or update HMRC quarterly until at least 2020.
As VAT already requires quarterly returns, businesses will not need to provide information to HMRC more often than they do now.
All businesses will have at least two years to adapt to the changes before being asked to keep their tax records digitally.
It is expected that these changes will be passed through the Finance Bill 2017, which is due to be announced sometime after Parliament returns on 05 September 2017.
Mel Stride, Paymaster General and Financial Secretary to the Treasury, said:
“We have listened very carefully to their concerns and are making changes so we can bring the tax system into the digital age in a way that is right for all businesses.”
Mike Cherry, Chairman of the Federation of Small Businesses, added:
“This promises to make the rollout far more manageable for all small firms.
“We look forward to receiving more detail from the Treasury on requirements for those small firms above the threshold that will have to comply from 2019.”
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