Your Making Tax Digital timeline
Making Tax Digital has gone through a lot of changes since it was first announced, way back in 2015. To help you understand everything that’s happened so far and what’s coming over the next few years, here’s a timeline of some of the most important dates:
- December 2015: The government publishes ‘Making Tax Digital’, its strategy for a new system of digital tax accounts for businesses, freelancers, and landlords.
- April 2019: Making Tax Digital for VAT comes into effect for VAT-registered businesses with a taxable turnover of over £85,000.
- April 2021: The soft-landing period for Making Tax Digital for VAT ends, meaning businesses can no longer copy and paste data into HMRC’s system.
- April 2022: Making Tax Digital for VAT becomes mandatory for all VAT-registered businesses, even those earning less than £85,000.
- January 2023: A new, points-based penalty system will be introduced for missing VAT submission or payment deadlines.
- April 2024: Making Tax Digital for Income Tax will become mandatory for sole traders and landlords earning over £10,000 per year.
- April 2026: The earliest date by which MTD for Corporation Tax might be introduced (this is still under review at the moment).
What was the soft landing period for Making Tax Digital?
During the first two years of Making Tax Digital for VAT, HMRC tolerated businesses copying and pasting figures into their digital VAT returns from another program, such as Excel. This was known as the soft landing period.
However, this period is now over, so you can no longer copy and paste this information. Instead, you need to use accounting software that allows you to transfer data electronically. This means that you can’t accidentally introduce errors when moving your info across.
What is Phase 2 of Making Tax Digital?
Phase 2 of MTD refers to the second phase of implementing MTD for VAT. When the system was launched in April 2019, only VAT-registered businesses with a taxable income over the VAT registration threshold of £85,000 per year had to use it.
This was expanded in April 2022, and it now applies to all businesses that are registered for VAT, regardless of income.
Is Making Tax Digital going to be delayed?
MTD for VAT is already mandatory for all VAT-registered businesses as of April 2022. Making Tax Digital for Income Tax was due to come into effect in April 2023 but was delayed for a year due to the pandemic—so it’ll now start in April 2024.
This means you have some time to get ready, but it’s unlikely that it will be delayed again (we’ll let you know if that changes, though!).