MTD rollout for Income Tax Self Assessment delayed for a year til 2024
An HMRC announcement made yesterday (23rd Sept 2021) will cause a sigh of relief for many businesses and self employed alike.
By now everyone in business will be aware of the new acronym in town, MTD, standing for Making Tax Digital. It’s the new system for getting everyone to submit their business finances online and was due to be extended to cover all income tax returns by April 2023. But now, it’s been extended to April 2024. In case this is slightly confusing, we want to clarify that MTD has already been rolled out for businesses who are registered for VAT and have a turnover of £85,000. So the changes relate ONLY to the Income Tax roll out. And brace yourself, there’s another acronym to get your head round – ITSA.
ITSA stands for Income Tax Self Assessment.
The deadline for the start of this more robust and time sensitive reporting system has been extended ‘til April 2024. Giving an extra year for businesses to become prepared for the additional administration it will require.
It means quarterly submission of your accounts. For anyone with income over £10,000 (including rental income). What was done once a year will actually be done four times and also a final set sent in at the end of the year, with an overview of the whole years’ figures.
So we will need to be in contact with you more to make sure you are helping your business manage this and make adjustments as necessary as your year progresses. It will mean your bookkeeping will need to be kept up to date and used to make critical businesses decisions real time even more than ever.
General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025, while the date other types of partnerships will be required to join will be confirmed in the future.
The delay in the system roll out will not only apply to your accounts but also to any penalties.
In March 2021, the government announced a new, fairer system of penalties for the late filing and late payment of tax for ITSA. The new penalty system for MTD for ITSA will now come into effect in the tax year beginning in April 2024, and in the tax year beginning in April 2025 for all other ITSA taxpayers.
If you would like to talk to us about anything related to the above please call 01763 257882 or email David@theaccountancypractice.com
No need to be a client already, and no need to pay for some phone support. We want to help you navigate these changes and understand what they mean for your business, in simple terms and without unnecessary jargon.
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If you would like to read the HRMC website’s guidance, here’s the link for the HMRC website.