HMRC recently announced that self-employed individuals and landlords will have more time to prepare for the transition to Making Tax Digital (MTD) for Income Tax. MTD for Income Tax will change the way self-employed individuals and landlords report to HM Revenue & Customs (HMRC).
This means that taxpayers that come within the scope of MTD must:
- keep all records in a digital format
- submit quarterly returns to report in-come and expenditure using HMRC approved software
Initially, MTD for Income Tax was due to commence from April 6, 2024 for individuals with turnover of more than £10,000 from self-employment and property. However, to relieve pressure on businesses caused by the current economic environment, the commencement date has now been moved back to April 6, 2026 and a phased approach will be applied.
From 6 April 2026, MTD for Income Tax will commence for individuals with turnover of more than £50,000 from self-employment and property. MTD will commence for individuals with a turnover of more than £30,000 from self-employment and property from April 6, 2027. The government will review the needs of smaller businesses, particularly those under the £30,000 threshold, before announcing any further requirements. The government will not extend MTD for ITSA to general partnerships in 2025 as previously planned. This will now follow at a later date.
Aaron Hemmington, Tax Partner at Hawsons, said:
“The introduction of MTD for Income Tax is set to be the biggest shake up of the tax reporting system since the introduction of self-assessment in 1997. It will represent an increased compliance burden for small businesses and landlords. Given the current economic situation it is right that the government have delayed its introduction. I also welcome the phased approach that is being applied which will give many micro businesses more time to prepare.”
Learn more about Hawsons Chartered Accountants by calling 01604 645600.
