The government will introduce Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) a year later than planned, in the tax year beginning in April 2024.
MTD for Income Tax will now be mandated for businesses 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.
In March 2021, the government announced a new, fairer 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. For many businesses, MTD is a natural extension of the way they already operate. Evidence shows that many businesses currently operating MTD are already experiencing wider benefits and reductions in input errors. Eligible businesses and landlords will have the opportunity to gain the benefits of MTD early by signing up to the pilot, which is already underway and will be gradually expanded during the 2022 to 2023 tax year, ready for larger-scale testing in the 2023 to 2024 tax year. Collaboration with tax professionals and customers has been key in the development of MTD and HMRC has worked closely with partners in the business and tax communities on the proposed design and scope of MTD for ITSA. The laying of regulations today sets out the technical details of how MTD for ITSA will work, and its new launch date – giving certainty to businesses. HMRC will continue to work in close partnership with business and accountancy representative bodies and software developers to ensure taxpayers are well supported as they adopt MTD for ITSA. For further information, and how to get prepared, speak to us on 01473 219475 or email us on info@protaxplus.co.uk!
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