Making Tax Digital delayed
Making Tax Digital (MTD) for Income Tax was due to start in 2023, but has now been delayed for 12 months. It will now start in April 2024. This will affect landlords and the self employed, who will need to start quarterly digital reporting to HMRC at this point.
Financial Secretary to the Treasury, Lucy Frazer, confirmed the delay in a written statement to MPs last week, saying ‘The government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the last year. In recognition of this and of stakeholder feedback, we will now be introducing MTD for ITSA a year later, in the tax year beginning in April 2024.’
General partnerships will be required to join the scheme the following year, beginning April 2025, with all other Partnerships the year after.
The announcement will also delay the implementation of the new penalty scheme for late filing and late payment of tax by the same timescale.
The written statement explained the delay as a chance for all parties to prepare fully for the changes, and to allow HMRC to offer ‘the most robust service possible’.
Our view is that this may well be a way of allowing HMRC time to clear the pandemic backlog and to prepare for the new social care levy!
It may also be possible that this delay will allow the government to synchronise the implantation of MTD with the proposed changes to tax year ends for businesses. This is still in the consultation stage, so there is no definite plan in place, but the original timescale was that any changes would be made after April 2024.
What does the delay mean for you?
If you were to be affected by the new MTD regime, our advice would be to carry on regardless!
To report quarterly in a digital format will require businesses to move their records to a digital platform. This is going to require a period of learning and familiarisation, so getting on with it sooner rather than later is a good thing. The removal of the requirement to submit the quarterly reports just removes some of the pressure caused by the change of process.
It would be really easy, now the ‘go live’ date has changed, to sit back and wait before you start to use the software, but please don’t! Once you get up and running you won’t look back, so please take the step now; you’ll be glad you did!
If you’d like to discuss the most suitable software option for you, then please get in touch. We love Xero, but there are other options, and we’ll help you make the best decision for you, rather than be prescriptive.
Business NewsWe send regular updates that keep clients aware of changes and suggestions on a wide range of subjects; if you’d like to receive those too, just add your details below and we’ll do the rest! We promise not to bombard you and you can unsubscribe at any time.