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.”
Find out more about Hawsons Chartered Accountants on 01604 645600 or visit their website here.
