- 23rd July 2020
- Posted by: Suzy Hill
- Category: Personal Tax, Making Tax Digital, Business News
Treasury outlines agenda for modernised digital tax system
The Treasury has outlined the next steps in its plan to create a ‘modernised digital tax system fit for the 21st century’.
The Treasury said that HMRC’s Making Tax Digital (MTD) initiative will be gradually extended. Currently, businesses above the VAT threshold of £85,000 are required to comply with Making Tax Digital for VAT (MTD for VAT).
From April 2022, the initiative will be extended to all VAT-registered businesses with turnover below the VAT threshold. From April 2023 MTD will apply to taxpayers who file income tax self-assessment tax returns for business or property income over £10,000 annually.
The MTD changes will affect the way that taxes are reported, not the level of tax that is collected. They will help to minimise avoidable mistakes, which cost the exchequer £8.5 billion in 2018/19.
Commenting on the issue, Jesse Norman, Financial Secretary to the Treasury, said: ‘We are setting out our next steps on MTD . . . as we bring the UK’s tax system into the 21st century.
‘MTD 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.’