The treasury has confirmed that there will be a delay of 2 years to the timetable for Making Tax Digital for Income Tax Self-Assessment. Due to come into effect from April 2024, this deadline has now been pushed to April 2026.
This is welcome news given the overwhelming calls from tax and accounting bodies that the IT structure simply isn’t ready for implementation yet. However, it does mean it’s another movement of goalposts which makes it difficult for businesses and landlords to plan ahead with any degree of certainty.
The full adjustments announced to the scope and timing of MTD for ITSA include:
- The 2-year delay until April 2026 for mandatory MTD ITSA filing
- Minimum income reporting level increased to £50,000, with those earning more than £30,000 mandated to join the scheme in 2027
- The situation for landlords and sole traders earning less than £30,000 will be reviewed
- Partnerships will not be brought into MTD for ITSA as previously planned in 2025
- Points-based penalty system will be extended to MTD ITSA filers when they join
The minister wrote, “The government understand businesses and self-employed individuals are currently facing a challenging economic environment, and that the transition for MTD for ITSA represents a significant change for taxpayers, their agents, and for HMRC.”
They have allowed more time to prepare, “so that all businesses, self-employed individuals, and landlords within the scope of MTD for Income Tax, but particularly those with the smallest incomes, can adapt to the new ways of working.”
The full statement can be read here.
However, there has been no confirmation as to whether this is likely to impact the basis period reform for the self employed and partnerships. The timing of this was originally aligned to fit in with the start of MTD for ITSA in April 2024 to get everyone onto a real time, tax year basis of profit reporting.
We will keep you updated on any further changes and how these may impact you.
Get in Touch
If you have any questions in relation to MTD for ITSA, please get in touch with your usual PM+M adviser or email email@example.com.