Are You Exempt from Making Tax Digital?

HMRC have already begun piloting Making Tax Digital (MTD) schemes, with the full initiative expected to be implemented by 2020. Further changes to the original proposal were announced at the Spring Budget of 2017. During HM Treasury and HM Revenue & Custom’s second Finance Bill in July 2017, concerns were raised by a number of tax and accountancy bodies that the previous £10,000 threshold exemption was far too low, and only micro-businesses would in fact benefit from it.

Under the new timetable the following changes were announced:

  • Only businesses with a turnover above the current VAT threshold – £85,000 will be obligated to keep digital records for VAT purposes
  • Such businesses will need to do so from 2019
  • Businesses will not be required to keep digital records to update HMRC quarterly, until at least 2020

Who Is Exempt?

Organisations already exempt from VAT will continue to be exempt from sending information to HMRC via electronic means.

Who Are the Digitally Excluded?

HMRC has also stated that is accepts that not all businesses will be able to comply with MTD and if a business cannot go digital, it will not be required to do so.

A small minority often referred to as the digitally excluded are defined as those who are unable to engage with accounting software for the following reasons:

  • disability
  • remoteness of location
  • age
  • religion


HMRC have confirmed that charities will be exempt from MTD obligations. The exemption, however, will not extend to any trading subsidiaries they may operate.

HMRC have also stated that they accept there may be other exemptions, which will be considered on a case by case basis.

You can find out more about the Making Tax Digital changes in our dedicated area here:

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