Who does MTD apply to?

Key facts:

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MTD will eventually apply to all individuals that do tax returns as well as companies with sales of more than £10,000 per annum.

Right now, MTD is shortly to apply to VAT registered businesses who make quarterly VAT returns.

Fuller explanation:

MTD for VAT will not initially apply to businesses making annual returns. MTD for VAT is not compulsory for businesses that are VAT registered but under the VAT threshold of £85,000.

There are some exceptions to the requirement to submit VAT returns although they will apply to very few businesses. The exemptions are as follows:

  • Religious objections

  • No internet connection available

  • Disability

  • Age

  • The business is insolvent

Implementation of MTD for VAT will be delayed by six months to 1st October 2019 for around 3.5% of organisations that would otherwise have to comply from 1st April 2019. These are not for profit organisations that are not set up as a company, trusts, VAT divisions, VAT groups, public sector entities which must give additional information on their VAT return (examples are government departments and NHS Trusts), local authorities, public corporations, traders based overseas, plus those making payments on account and using the annual accounting scheme.

HMRC is focusing on MTD for VAT and details of the follow-on implementations are not yet clear. MTD for income tax covering self-employed and landlords, plus MTD for corporation tax is currently planned to be introduced by April 2020 at the earliest. HMRC is also running a project which will introduce a Personal Tax Account (PTA) for individuals.