Government removes smallest businesses from digital tax requirements until 2020

After pressure from business groups, the government has announced that companies below the VAT threshold will now not have to record and file tax information via digital means until 2020.

HM Revenue & Customs' Making Tax Digital plans require businesses to submit information about their tax affairs four times a year using apps and other online methods.

However business groups, including Enterprise Nation, said many of Britain's smallest companies could struggle to comply and need time to prepare.

Ministers announced various concessions but today said the mandation will now only be for VAT registered businesses above the £85,000 VAT threshold until 2020.

The full changes are:

• only businesses with a turnover above the VAT threshold will have to keep digital records and only for VAT purposes

• they will only need to do so from 2019

• businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020

Mel Stride, financial secretary to the Treasury and paymaster general, said: "Businesses agree that digitising the tax system is the right direction of travel.

"However, many have been worried about the scope and pace of reforms.

"We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses."