Making Tax Digital (MTD) – Phase 2

Introduced for VAT in April 2019, Making Tax Digital requires businesses to keep digital records and send quarterly updates to HMRC using compatible software. 

HMRC have confirmed that they will be launching phase 2 of MTD, extending MTD as follows:  

• From April 2022, MTD for VAT will apply to all VAT registered businesses.  
• From April 2023, MTD for Income Tax Self-Assessment (ITSA) will be introduced for unincorporated businesses and landlords with income over £10,000. 

It is also worth noting that HMRC has indicated they will meet later this year to discuss the possibility of also extending MTD to corporation tax. 

What do I need to consider regarding the second phase of MTD?  

Whilst there is a long lead time for the extension of MTD, there is a lot of work to be done to get businesses, software and HMRC systems ready. Currently, there are only 6 software products that are compatible with MTD for ITSA so it is worth checking your system is compatible if you believe you will be impacted by these changes. We do imagine that like MTD for VAT more options will be made available, but one thing is clear manual records are coming to an end. 

How can Wright Vigar help me with the transition to MTD? 

Over the coming months, Wright Vigar will be hosting a series of seminars detailing MTD and how it will affect you and what solutions are out there to help you transition to MTD. 

Wright Vigar and the team of Cloud Experts can also provide bespoke support including advice on what software to use, training, how to make the most of MTD.