What is Making Tax Digital?

Definition of Making Tax Digital

Making Tax Digital is a government initiative that sets out a bold vision for a digital tax system to "make it easier for individuals and businesses to get tax right and keep on top of their affairs".

The aim of the initiative is to make tax administration more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system.

The changes outlined in the Making Tax Digital initiative will apply to a wide range of taxpayers, including most businesses, self-employed people and landlords, as well as individual taxpayers.

When will the changes happen?

Making Tax Digital has a phased rollout plan which started in early 2016. Its key milestones include:

  • April 2017 - Private pilot of rollout starts.
  • July-December 2017 - Digital tax accounts show taxpayers an overview of their liabilities in one place and HMRC begins a private pilot of Making Tax Digital for VAT.
  • Spring 2018 - Live pilot of Making Tax Digital for VAT begins.
  • April 2019 - Businesses with VATable sales above the VAT threshold are required to keep digital records and submit quarterly returns for VAT purposes only through their accounting software.
  • 2021 onwards - HMRC looks to widen the scope of Making Tax Digital.

Update: due to the coronavirus crisis, HMRC has announced that they have extended the deadline for putting digital links in place between accounting software and HMRC's systems. The new deadline is now your business's first VAT period following 1st April 2021.

More about Making Tax Digital

To stay up-to-date with the new initiative, take a look at our Making Tax Digital resources for small businesses and accountants.

More information about the Making Tax Digital initiative, along with a detailed breakdown of timescales and milestones, is available from gov.uk.

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