The government has announced that it will be extending its ‘Making Tax Digital’ reform of the UK tax system, with additional firms set to be included in the expansion.

Making Tax Digital was first rolled out last year, but the initial launch only made it mandatory for companies that had annual profits higher than the £85,000 threshold for paying VAT. The reforms require firms to maintain digital financial records and submit their returns using software compatible with the Making Tax Digital system on the HMRC site. The first rollout took in over 1.4 million firms, but now many more will be expected to sign up.

Starting in April of next year, it will be expanded to include all firms in the UK that are registered for VAT, regardless of whether they have turnovers above the payment threshold. Then, in April of 2023, it will become mandatory for anyone who files a tax return and has annual earnings of over £10,000 from either property or a business.

The government is announcing these next steps in its tax digitisation reforms well in advance so accountants, business owners and landlords have time to prepare. This period will also allow tech firms to develop more compatible software.

SMEs or landlords who are concerned about the forthcoming changes may decide that they need to talk to an accountant that specialises in tax return services in Goole or their local area to ensure they comply.