Making Tax Digital

How it effects your business

What is Making Tax Digital?


Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their tax affairs.


HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making groundbreaking new changes to the way the UK tax system works – transforming tax administration so that in theory it will be:


Easier for taxpayers to get their tax right

More effective and more efficient

Making Tax Digital info graphic 3

Making Tax Digital for VAT


HMRC claim to have taken a major step forward in their ambition with the introduction of Making Tax Digital for VAT first of all. Their pilot service is open to around half a million businesses whose affairs are up to date and straightforward. They will extend to most other business types over the coming months.


VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019.


The exception to this is a small minority of VAT-registered businesses with more complex requirements. As part of planning for the VAT pilot, HMRC have continued to engage with stakeholders and listen to their concerns about business readiness for Making Tax Digital. They have made the decision to delay mandation for these customers until 1 October 2019 giving them an extra six months to test the service with them in the pilot before they are mandated to join - see HMRC timeline below.

Making Tax Digital info graphic 2

Making Tax Digital for VAT timeline


October 2018

Open to sole traders and companies (except those which are part of a VAT group or VAT Division) provided they are up to date with their VAT. Those who trade with the EU, are based overseas, submit annually, make payments on account, use the VAT Flat Rate Scheme, and those newly registered for VAT that have not previously submitted a VAT return, are unable to join at this point. Those customers with a default surcharge within the last 24 months will be able to join the pilot by the end of October 2018.


Late 2018

Private testing begins with partnerships and those customers that trade with the EU.


Late 2018/early 2019
Open to other sole traders and companies who are not up to date with their VAT, users of the Flat Rate Scheme and businesses newly registered for VAT that have not previously submitted a VAT return.


Early 2019 Open to partnerships and those customers that trade with the EU.


Spring 2019  Pilot open for Making Tax Digital customers that have been deferred.


April 2019 Making Tax Digital mandated for all customers (except those that have been deferred).


October 2019
  Making Tax Digital mandated for customers that have been deferred. The 6-month deferral applies to customers who fall into one of the following categories: trusts, ‘not for profit’ organisations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users. The deferral will apply to around 3.5% of mandated customers.

Making Tax Digital info graphic 1