UK Autumn Budget 2017 – Making Tax Digital timetable unchanged

Nov 27, 2017

The Autumn Budget confirms that the timetable for Making Tax Digital (“MTD”) is unchanged from the revised timetable announced in July 2017. Under the current timetable, from April 2019, only businesses with turnover above the VAT registration threshold will have to keep digital records, and only for VAT purposes.

The scope of MTD will not be widened before the system has been shown “to work well”, and not before April 2020 at the earliest. HMRC are due to start piloting MTDfB for VAT by the end of this year, starting with small-scale, private testing, followed by a wider, live pilot starting in Spring 2018.  This should allow around a year of testing before any businesses are mandated to use the system.  The MTD legislation is also included in the Finance (No. 2) Act 2017 which has just received Royal Assent. 

There may be one catch though – the MTD turnover exemption limit is linked to the VAT registration threshold. In the past this has increased every 1 April. In the Autumn Budget, the Chancellor announced that this will be fixed at £85,000 for two years from 1 April 2018. No further increases in the threshold or a fall in the threshold in future could mean more businesses move into MTD earlier as a result.

According to the Chancellor, the fixing of the threshold is a direct response to the OTS’s report Value Added Tax: Routes to Simplification? which pointed out that the UK’s threshold is currently the highest in the EU and the OECD. In response to that report, the government plans to consult on the design of the threshold. The knock on impact of this on MTD timing for smaller businesses will need to be carefully considered.