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Are you on top of MTD's latest developments?

Are you on top of MTD's latest developments?

The widening scope of MTD is highlighting several issues, including the limited availability of the MTD for income tax pilot scheme.

 

Alongside the low awareness of the recent expansion of MTD for VAT to all VAT-registered businesses, there seems to be a number of gaps in both access and understanding.

Pilot Scheme

Although the functionality of the MTD for income tax pilot scheme is constantly evolving, HMRC is still restricting sign-up to small numbers, citing the need for detailed, individual guidance for users.

From July, taxpayers can join the pilot if they have the following types of income:

  • Self-employment, even if there is more than one business
  • UK property
  • Employment income
  • UK savings and dividend income

Functionality to be added over the coming months will mean that pilot scheme users will be able to claim relief in respect of personal pension contributions and the marriage allowance, and it will also be possible to report capital gains, pay voluntary class 2 NICs and make student loan repayments.

The scope of the pilot scheme is still quite restricted, with taxpayers only able to sign up through their software provider.

MTD for VAT

MTD for VAT was extended to all VAT-registered businesses from April 1st. Previously, it only applied to those above the £85,000 VAT registration threshold.

Some new entrants will currently be in the process of preparing their first MTD-compliant VAT return – although research from HMRC indicates considerable misunderstanding as to how MTD for VAT differs from the previous electronic VAT return filing requirement. Some 30% of responders thought they had already signed up to MTD, when in fact they had not.

There will be something of a delay for those businesses who submit VAT returns annually. For example, with an annual accounting period running to 31st March 2023, the first MTD return will not need to be submitted until 31st May 2023.

As MTD progresses, you can stay up to date with HMRC guidance here, or you can get in touch with me if you require assistance with your MTD transition.

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