Making Tax Digital removed from 2017 Finance Bill ... what does the future hold?

The government yesterday confirmed that Making Tax Digital (MTD) along with other measures, has been dropped from the 2017 Finance Bill.

The residual Bill has been estimated to be roughly 140 pages in length compared to the current 762 pages, a reduction of more than 80% by volume. 

The Chartered Institute of Taxation (CIOT) recently wrote to Philip Hammond urging him not to rush through MTD without thorough Parliamentary scrutiny first.

Making Tax Digital has sometimes been seen as controversial.

The general consensus in the accounting/tax profession is that the principle behind MTD is acceptable, but perhaps the timescale given for such a dramatic change in the way businesses, particularly smaller businesses, report to HMRC, is not.

MTD is [was?] due to be introduced for businesses and landlords with gross income above the VAT threshold (currently £85,000) from April 2018 with smaller businesses and landlords brought in a year later.

From 6 April this year, a beta pilot scheme has been ongoing, however HMRC have yet to comment on the progress of this and are not expected to until later this year.

It remains to be seen what the intentions now are in respect of MTD but this should become clearer after the General Election in June.  It would be unlikely that MTD will be scrapped altogether but perhaps the government (whoever that may be) will look to postpone the implementation of MTD to make the transition more manageable.

This, I feel, would be welcomed by most.

As well as Making Tax Digital, measures announced to reduce the dividend tax allowance from £5,000 to £2,000 from April 2018 have also been left out of the Bill ... for the time being.

We will of course keep our clients informed of any changes that are announced.


Paul Buckley, Tax Manager, Waltons Clark Whitehill