Making Tax Digital for Income Tax Self Assessment delayed by a yearcreative77
Hot off the press HM Revenue and Customs (HMRC) announced last week that businesses will have an extra year to prepare for the digitalisation of Income Tax.
The government will now introduce Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) a year later than planned, in the tax year beginning in April 2024. This is due to the government listening to feedback and realising the challenges that businesses have already had to deal with over the last 18 months.
The government states that MTD is part of its key ambition to become one of the most digitally advanced tax authorities in the world and is the first phase of HMRC’s move towards a modern, digital tax service fit for the 21st century. Benefits to businesses include having detailed figures easily accessible and at the touch of a button as well as up-to-date information regarding how much profit your business is making or if you need to act to make any changes.
MTD for Income Tax will now be mandated for sole traders and landlords with a business income over £10,000 per annum in the tax year beginning in April 2024.
General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025, while the date other types of partnerships will be required to join will be confirmed in the future.
However, we will start working with our clients over the next two years to prepare them for this move and get the necessary processes and software in place to support this transition so it is as straight forward and easy as possible. If you do have any concerns or queries please do not hesitate to get in touch.
It is also worth noting that in March 2021, the government announced a new system of penalties for the late filing and late payment of tax for ITSA. The new penalty system for those who are mandated for MTD for ITSA will now come into effect in the tax year beginning in April 2024, and in the tax year beginning in April 2025 for all other ITSA taxpayers.