HMRC’s Making Tax Digital programme will be gradually extended, as part of the Treasury’s long-term tax digitisation plan.
This is designed to boost national productivity, make business easier and for people to pay tax and reduce avoidable errors and fraud.
At present, businesses above the VAT threshold of £85,000 are covered by the system, requiring them to keep digital records and provide VAT returns through software. Since its introduction in 2019 more than 1.4 million businesses have joined the programme, submitting over 6 million returns.
From April 2022, the programme will be extended to include all VAT registered businesses with turnover below the £85,000 VAT threshold. From April 2023, it will also apply to taxpayers filing income tax self-assessment tax returns for business or property income over £10,000 annually.
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.”
Making Tax Digital will not affect the level of tax that is collected, but it will help minimise avoidable mistakes.