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Making Tax Digital delayed until at least 2020

It was no surprise to many when Mel Stride MP, Financial Secretary to the Treasury, recently announced further substantial delays to the implementation of the much talked about Making Tax Digital (MTD) initiatives.


Since the MTD proposals were first announced I have been suggesting that the initiatives were being pushed on too quickly and without sufficient consultation with interested parties. There has been consultation but, up until now, HMRC have not been listening. Now, however, the dissenting voices have been heard and the new rules will not come into force, other than for VAT, until 2020 at the earliest.


VAT to be filed digitally from April 2019


The only exception to the delay is for VAT registered businesses.


MTD will be obligatory from April 2019 for VAT returns. This is perhaps a sensible move given the existing requirements for quarterly submission of VAT returns online.


Businesses can, if they wish, voluntarily adopt the MTD procedures from April 2019 for other taxes. However, I suspect that there will be very few early adopters because it could well be beyond 2020 when MTD becomes mandatory – the announcement was ‘2020 at the earliest’.


With the delay, and the staged approach with VAT, HMRC should now have plenty of time to test their systems to ensure that they work and are robust before a full roll out of MTD is sanctioned.


I believe that the announcement is very good news and does show that ministers have listened to representations and announced what many thought was an inevitable conclusion to what is potentially a very significant change to the UK tax system.


For help or advice on any tax matter contact us.

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The UK's tax system for individuals classed as "not UK domiciled" (often called "non-doms") is undergoing a significant overhaul. This system has traditionally offered tax advantages for foreign income and gains, but those benefits are coming to an end. Non-domiciled individuals are generally those who haven't established strong ties to the UK in terms of residence or family connections. Previously, they enjoyed a tax perk known as the "remittance basis of taxation." This allowed them to avoid paying UK income tax on foreign income and capital gains, as long as the money remained outside the UK. However, these advantages have been gradually restricted in recent years. The new reforms, announced by the Chancellor of the Exchequer – Jeremy Hunt, represent a change to the existing non-dom tax system. The New System - What Does it Mean Non-Doms in the Future? Starting April 6th, 2025, a new system will be in effect. Here's what it entails for non-domiciled individuals who become UK resident after that date: Temporary Tax Exemption: If you haven't been a UK resident in the past 10 years and become one after the reform, you'll benefit from a temporary tax exemption. This means your foreign income and gains will be exempt from UK income tax for the first four years of your UK residency. Standard Taxation After Four Years: After the initial four-year grace period, your foreign income and gains will be taxed on the same basis as other UK residents. To avoid double taxation, relief will be available against UK tax under Double Tax treaties or the Unilateral system for any foreign tax already paid. What about Existing Non-Doms? The government acknowledges the complexities of transition for current non-dom who are UK residents. Transitional rules are being considered to ease the shift. These may include: Reduced Tax Rate for Bringing Foreign Income to UK: Existing non-doms might be offered an opportunity to bring previously untaxed foreign income and gains back to the UK at a reduced tax rate. Rebasing Foreign Assets for Capital Gains: There's also a possibility of "rebasing" the value of non-domiciled individuals' foreign assets for capital gains tax purposes. This could mean using the asset value in 2019 as a baseline, potentially reducing their future capital gains tax liability. Uncertainties and Taking Action The details of the new system and the transitional rules are still under development. The full picture will become clearer when the government publishes further consultations later in the year. Given the complexities involved, it's crucial for individuals who might be affected by these reforms to seek professional tax advice. Understanding the opportunities and potential pitfalls of the new system can help you make informed decisions about your financial future. While the non-dom tax reform simplifies matters to a certain extent, it introduces new considerations for individuals with international finances. Staying informed and seeking professional guidance will be key to navigating these changes effectively.

Friend Partnership is a forward-thinking firm of Chartered Accountants, Business Advisers, Corporate Finance and Tax Specialists, based In The UK

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