The government has pledged to continue the rollout of Making Tax Digital (MTD), with the scheme to be expanded from 2022.
So from 1 April 2022, all VAT-registered companies must switch to MTD, regardless of the value of their sales. And, one year later, the programme will be extended to any individuals filing self-assessment income tax returns for annual business or property income in excess of £10,000.
The government says that providing notice of the extension of MTD in advance will give businesses and individuals – including the self-employed and private landlords – plenty of time to plan for the switch.
It will also allow software firms time to develop new products that are compatible with HMRC’s systems. This will, the government said, include “free software for businesses with the simplest tax affairs”.
There are currently 539 different MTD-registered software programs that businesses can use to file VAT returns, 17 of them free.
Financial secretary to the Treasury Jesse Norman said: “We are setting out our next steps on Making Tax Digital today, as we bring the UK’s tax system into the 21st century. Making Tax Digital will make it easier for businesses to keep on top of their tax affairs. But it also has huge potential to improve the productivity of our economy, and its resilience in times of crisis.”