Government Announces Roadmap To Making Tax Digital

The Government set out its roadmap for a full Making Tax Digital rollout on the 21st July 2020. The announcement covers everything from VAT to Income Tax and Corporation Tax ...

MTD for VAT was introduced in April 2019 for VAT registered businesses with a taxable turnover above the usual VAT threshold of £85,000. This will be extended to all VAT registered businesses from April 2022 regardless of their turnover.

"Making Tax Digital for Income Tax starts in April 2023!"

This is for anyone who is self-employed with a gross income above £10,000. This means that a great number of small business owners and landlords will need to submit a quarterly summary of their business income and expenses to HMRC using MTD compatible software.

The Government has said that this kind of information would have been of great use to them during the COVID-19 outbreak in their response with support packages. HMRC had to use data from the 2018/19 tax returns which meant that some people were left without grants when they could have been helped if MTD for Income Tax was available.

The existing small pilot of MTD for Income Tax will gradually be extended in the coming months to help more taxpayers to test it out and allow them to familiarise themselves with it and for HMRC to work out the bugs in the system before full rollout.

Individuals will make a quarterly submission of their income and expenses and receive an estimated tax calculation to help them budget for their tax. At the end of each financial year, they can update and finalise this information using MTD for Income Tax compatible software before submitting their final return electronically through the software.

"Making Tax Digital for Corporation Tax is still in consultation, and the Government has promised more information in the Autumn!"

The Government believes the Treasury loses around £8.5bn a year in tax due to innaccurate reporting and believes data sent directly to HMRC will avoid errors and ensure everyone pays what they owe.


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