Making Tax Digital (MTD) is an initiative by HMRC which will revolutionise the UK tax system and will ultimately bring an end to self-assessment.
The primary aim of Making Tax Digital is to make tax administration more effective, efficient, and easier for taxpayers through the implementation of a fully digitalised tax system by 2020, whilst also reducing HMRC’s overheads for managing tax affairs.
The changes apply to a wide range of taxpayers, including most businesses, self-employed professionals, and landlords. This ‘new and improved’ tax system will require the majority of business owners to maintain digital records using compatible software.
Implementation of MTD consists of three separate phases:
- MTD for VAT (1st April 2019)
- MTD for Income Tax (1st April 2020 at the earliest)
- MTD for Corporation Tax (1st April 2020 at the earliest)