BRIEFING PAPER Number 7949, 24 December 2018 By Antony Seely Making Tax Digital Contents: 1. Background 2. Budget 2017 3. Recent developments 4. Annex: Treasury Committee correspondence on MTD www.parliament.uk/commons-library | intranet.parliament.uk/commons-library |
[email protected] | @commonslibrary 2 Making Tax Digital Contents Summary 3 1. Background 5 1.1 Budget 2015: ‘Making Tax Easier’ 5 1.2 Making Tax Digital: December 2015 7 1.3 Consultation on MTD & the Treasury Committee’s inquiry (2016-17) 9 2. Budget 2017 12 2.1 A one year deferral for the smallest businesses 12 2.2 Discussion of compliance costs, mandatory returns, and Exchequer yield 16 2.3 Response to the Treasury Committee’s report 20 2.4 Finance Act 2017: a revised timetable 25 2.5 Finance (No.2) Act 2017 30 3. Recent developments 35 4. Annex: Treasury Committee correspondence on MTD 38 Cover page image copyright Gladstone’s red box by The National Archives UK. Image cropped. No known copyright restrictions. 3 Commons Library Briefing, 24 December 2018 Summary In December 2015 HM Revenue & Customs published Making Tax Digital - its strategy to implement a new system of digital tax accounts to be used by businesses, the self- employed and landlords. The Government proposed that the new system would be rolled out over two years, first applying to income tax returns (in 2018), and then extended to VAT (in 2019) and corporation tax (in 2020).1 Initially the Government anticipated that in the first phase from April 2018 businesses, self-employed people and landlords would be required to use digital accounts, updating HMRC on a quarterly basis; employees and pensioners would be exempt, unless they had secondary incomes of more than £10,000 per year from self-employment or property.