Great relief as MTD for Self-Assessment delayed
Making Tax Digital what does this mean for you?
A Christmas gift or a Christmas nightmare, whichever way you look at it, HMRC announced on 19 December 2022 that Making Tax Digital (MTD) for Self Assessment (ITSA) would be delayed further.
MTD for ITSA will now be staggered as follows:
April 2026 – Self employed business owners and landlords with turnover over £50,000 will need to comply.
April 2027 – Self employed business owners and landlords with a turnover of over £30,000 will need to comply.
There is no mention of when self-employed business owners and landlords with a turnover of < £30,000 or partnership businesses will need to comply. However, if the integration of MTD VAT was anything to go by, it will eventually happen!
So what does this all mean and what even is MTD?
MTD is the governments way of making our tax system electronic. It means that you will be required to keep digital records and submit digital returns quarterly. You will then produce a final end of period statement which will replace the current Self-Assessment tax return.
That’s two years away I can worry about it then, no?
Short answer NO!
Self-employed business owners and landlords will not be used to submitting returns quarterly and likely will keep their records in paper format.
This will not be acceptable going forward and you will need to invest in an accounting software that is MTD compliant. This means that you will have to get used to a new way of working. You will also need to discuss with your accountant the best time to transfer. This will take some processing so leaving it to the last minute will cause a lot of unnecessary stress!
Now lets look at the basis period reform!!
Making Tax Digital and the Basis period reform
If your accounting period does not run from 6 April to 5 April each year and you use a different period i.e. report 1 April to 31 March you will need to change this from the tax year 2024/25 onwards! Overlap profits will no longer exist!
Therefore, whilst MTD is two years away there is still a lot to do especially if you need to change your basis period!
Get in touch today and we can start the ball rolling!