Budget 2018 provides clarity for Making Tax Digital VAT threshold
Chancellor Philip Hammond used his Budget 2018 speech to offer clarity to the UK’s army of small businesses regarding the upcoming implementation of Making Tax Digital (MTD) for VAT returns.
From 1st April 2019, small businesses with a taxable turnover exceeding the VAT registration threshold will be required to file digital VAT records via MTD-compatible software.
This move would have brought hundreds of thousands more small firms into the MTD for VAT programme. However, Mr Hammond moved to allay those fears in last week’s Budget 2018 speech, confirming that the existing £85,000 VAT threshold will remain until at least April 2022.
The move, which will cost the Exchequer £60 million in 2020/21 and a further £130 million in 2021/22, gives certainty to small businesses below the VAT registration threshold and allows them to continue with their existing VAT reporting regime.
This means that small businesses across the country must still be prepared to keep their taxes in order digitally in less than two years.
To ensure small firms in rural areas can partake in the MTD programme – and meet the Government’s strategy of having a nationwide full fibre network by 2033 – the Government allocated £200 million in Budget 2018 to pilot “innovative approaches to deploying full fibre internet in rural locations”.
The deployment will begin in the Borderlands, Cornwall and the Welsh Valleys; starting with primary schools, followed by a new voucher scheme for nearby residential and commercial properties.
The Government also confirmed that Suffolk would be the first local region to be handed £5.9 million of funding from the Local Full Fibre Networks challenge fund, ensuring next-generation full fibre connectivity for the county’s key public buildings.
We’ll be continuing to update our members on any developments between now and April next year. To see how Making Tax Digital will affect your business, click here.
Source: bira approved service partner, TaxAssist Accountants