Making Tax Digital for Income Tax delayed until 2024

The government have announced that Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) will be introduced a year later than planned. It is now proposed to come into place for the tax year beginning in April 2024.

Why is MTD being introduced?

Making Tax Digital is a key part of the Government’s plans to make it easier for businesses to get their tax right and keep on top of their tax affairs. Keeping digital records and providing updates to HM Revenue & Customs directly will help reduce errors, cost, uncertainty and worry.

Who does it affect?

The first deadline has already passed for businesses who are VAT registered. This affects all businesses with UK taxable turnover above the VAT threshold. These businesses should now be completing their VAT returns digitally.

Making Tax Digital for income tax will be introduced from April 2024.

This will affect the following taxpayers:

• Self-employed business with turnover over £10,000
• Landlords with turnover over £10,000
• Partnerships

When will it apply?

MTD was originally proposed to commence from April 2023. However, after listening to stakeholder feedback from businesses and the accounting profession, the government will be introducing Making Tax Digital for Income Tax Self-Assessment a year later than planned. It is now due to commence in the tax year beginning in April 2024.

This will give the self-employed and buy to let landlords an extra year to prepare for the digitalisation of Income Tax. It will also allow HMRC more time for customer testing of the pilot system.

The start date for simple partnerships to join MTD for ITSA has been put back further to the tax year beginning in April 2025. More complex partnerships will be required to join at a later date yet to be announced.

There has been no change to the £10,000 per annum gross income threshold which means that most self-employed traders and buy to let landlords will be mandated to comply with MTD for income tax from April 2024.

If you’re not already prepared for these changes, please speak to your usual Carpenter Box adviser or contact our tax team on 01903 234094.