Phase 1: MTD payroll - Real Time Information (RTI) reporting started in April 2013. Employers with payroll for employees must every time they pay staff, electronically submit to HMRC details of amounts to be paid to each employee, hourly rate, hours worked and deductions. For many employers, this may be weekly or monthly. You must usually report RTI using approved payroll software before you physically pay your staff. We usually do this for staff on the same day to avoid confusion.
Phase 2: MTD for VAT registered businesses. MTD for VAT started in April 2021. All VAT returns must be submitted electronically via an approved book keeping software package.
Phase 3: MTD for Non VAT registered businesses. For smaller turnover companies that are not VAT registered (turnover below £85,000 threshold), the deadline for MTD now takes effect from April 2022. So you need to start planning now.
Phase 4: MTD for Income Tax. Self Employed and Landlords with annual business or property income (not your profit after expenses, it is just the gross income) in excess of £10,000 pa will be required to file real time income and tax information returns quarterly under MTD as well as a final year end self assessment return from April 2023. You can already voluntarily do this now as part of a number of pilot schemes but it becomes compulsory for all in April 2023. Start your planning early for this.
Phase 5: MTD for Corporation Tax. This is in consultation at present and likely to come into force in 2026.
We all need to get prepared for the various changes to making tax digital.