The introduction of Making Tax Digital is going to see the end of the tax return and mandatory digital record keeping.

Unincorporated businesses, landlords, incorporated businesses and very large partnerships are going to be brought into Making Tax Digital at various stages over the next few years.

There are some exemptions which are explained separately here.
 

April 2017

HMRC is going to launch a pilot on 3 April 2017 to encourage unincorporated businesses and landlords to effectively adopt Making Tax Digital early.

Any unincorporated businesses and landlords who wish to volunteer to enter the pilot will need to have Making Tax Digital compatible software and an annual gross income of more than £10,000.

Willing volunteers will initially need to go through a subscription process to join the pilot. This process is only likely to accept a limited number of applicants per day, as HMRC gradually builds capacity and tests its systems.
 

April 2018

This is the Making Tax Digital go live date for unincorporated businesses and landlords who pay Income Tax and who have a gross turnover in excess of the VAT registration threshold limit.

The VAT registration threshold limit is due to rise to £85,000 on 1 April 2017 and may well have risen again by April 2018. Any such announcement is likely to be made in the Autumn Budget 2017.

For example, an unincorporated business with a turnover of £87,000 and a year end of 30 April 2018 will enter Making Tax Digital on 1 May 2018. An unincorporated business with a turnover of £95,000 and a year end of 31 December 2018 will enter Making Tax Digital on 1 January 2019.

Qualifying landlords will enter Making Tax Digital straightaway on 6 April 2018 as rental accounts are prepared on a tax year basis.
 

April 2019

This is the Making Tax Digital go live date for unincorporated businesses and landlords who pay Income Tax and who have an annual gross income of more than £10,000 and are trading below the VAT registration threshold limit.

April 2019 is also the Making Tax Digital go live date for VAT. Businesses who are registered for and pay VAT, will be required to report their VAT return information through MTD.
 

April 2020

This is the Making Tax Digital go live date for Corporation Tax.

Incorporated businesses, in other words Limited Companies, will be brought into Making Tax Digital from 6 April 2020.

Very large partnerships with a turnover in excess of £10m are also likely to enter Making Tax Digital at this time.
 

Can we help?

If you have any questions about Making Tax Digital please contact our Head of Technical Research, Guy Smith, on 0345 223 2727 or at g.smith@abbeytax.co.uk.