Making Tax Digital Update
The government has announced a further delay to the introduction of Making Tax Digital for Income Tax Self-Assessment (MTD ITSA).
Why and what’s the new timeframe?
The initial plan
Originally MTD ITSA was going to be mandatory for the self-employed/landlords earning over £10,000, starting April 2024.
The change would have meant mandatory reporting of income on a quarterly basis using MTD approved accounting software.
In a statement released on 19 December, the government has finally acknowledged that MTD ITSA is a significant change for all concerned, and that launching during an economic crisis is not ideal.
MTD ITSA will now be delayed until April 2026, with the self-employed and landlords with turnover in excess of £50,000 joining first.
Those with income over £30,000 but not exceeding £50,000 will not need to join until April 2027.
A start date for general partnerships has not yet been announced.
The government will now review the needs of smaller businesses before asking those earning less than £30,000 to join.
Given the expected additional costs and administrative burden for small businesses this will undoubtedly be a very welcome change. However, HMRC will have its work cut out when operating different systems for self-assessment customers so further delays could be on the cards.