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Making Tax Digital: Where Are We Now?
The riddle of Making Tax Digital goes on, throwing up questions left, right and centre. Progress has, by all accounts, been slow, and is hobbled further by our political situation. The Conservatives, unsurprisingly, have chosen to delay the scheme as they work out the best way forward.
MTD is definitely going to happen. But we sympathise with any of you caught in the chaos, unsure of the latest news. To help, here’s the low-down on where we are with it all, and how you stand to benefit…
MTD scrapped from the Finance Bill
The 2017 general election was, for many, a radical statement of where our country is headed. Perhaps sensing discord over its policies, the Conservative Party chose to trim the Finance Bill – of which MTD was a part – down to its barest elements back in spring.
This isn’t a cynical move; merely one that admits there has to be better planning for the scheme before launch day. Organisations such as the ICAEW and ACCA welcomed the decision, saying that more needs to be discussed until MTD stands up to a vote in Parliament.
Reduced pressure for small businesses
Contractors, freelancers and small business owners who were readying themselves for the switchover can now breathe a sigh of relief. However, there’s a lot more leeway to savour, as the start date has been pushed back to April 2019. And this is only applicable to people who turn over a substantial amount of cash…
Anyone earning above £85,000 will have to submit their records from that date – but only for VAT purposes. These same earners have another 12 months after that to get their act together for MTD: 2020 is the real line in the sand, whereby all Self Assessments must be done digitally.
So, everyone has at least two years to think about income streams, receipt collection, and any software that can simplify their bookkeeping (FreeAgent, we’re looking at you!). But it gets better – those under the £85K limit get to choose when they adopt MTD. As most independent professionals fall in that margin, it’s a smart development, because it doesn’t force you into the system before you’re 100% prepared. We’ll say it again: earn less than the VAT threshold, and Making Tax Digital is a voluntary manoeuvre.
Voluntary registration
Since there is, presumably, a lot more that HMRC has to work out before full implementation, you can be an active part of what MTD will look like as it’s polished up.
The government has announced pilot schemes beginning in April 2018. These are open to the public for voluntary registration, so keep your eyes peeled for more details about this as we approach the end of the financial year.
Hopefully, freelancers and contractors will have their voices counted in the long run-up to Making Tax Digital. Until then, don’t forget to see what FreeAgent software can do for your organisational skills, and call or message us if you have any concerns about digital taxation.