Making Tax Digital (MTD) for Income Tax Self-assessment
The UK government has announced the delay to Making Tax Digital for Income Tax Self-assessment (MTD ITSA) by a year, due to the pandemic and hardship faced by businesses.
Therefore, MTD ITSA will come into force from April 2024 with MTD for general partnerships postponed to April 2025.
What is MTD?
This will require self-employed businesses and landlords with annual business or property income above £10,000 to keep digital records. The base year for testing the MTD turnover threshold will be the tax year 2022/23. However, the government is encouraging people to voluntarily sign up beforehand.
There is a list on the government website of HMRC-approved compatible software that taxpayers must use to manage their tax affairs. Any taxpayer earning over the £10,000 threshold will need to complete a self-assessment and file quarterly updates and an end-of-period statement to finalize profits. A final return will also be required to disclose any other income, gains or reliefs.
Why is it moving to MTD?
HMRC’s idea to move towards digital records is to make it easier for individuals and businesses to get their taxes right and keep on top of their affairs. HMRC believe this will reduce the number of mistakes taxpayers make.
This new change will bring ITSA into line with MTD for VAT that came into force from 1 April 2022.
Due to the delay in MTD ITSA until April 2024 specific details are yet to be published.
If you would like more information on the above, speak to our self-assessment tax experts today.