Breaking tax news this afternoon 23rd September 2021

Making Tax Digital for Income Tax – the requirement to keep records digitally, and submit quarterly tax returns – has been postponed from April 2023 to April 2024.

This recognises that a lot more work is required by HMRC and Taxpayers to be ready for this change which is the most significant overhaul to Tax Administration for a generation, and, arguably, more significant than the 1997 transition to Self Assessment.

As a recap MTD for IT will apply to:
– Sole traders with a turnover of over £10,000 – from April 2024 now
– Landlords with rental income of over £10,000 – from April 2024 now
– Partnerships with turnover of over £10,000 – a year later, April 2025

Under MTD for IT, mandated taxpayers must:
– keep their records digitally via either an program/app or an spreadsheet with a electronic link to HMRC
– submit quarterly tax updates – effectively a mini tax return
– submit an end of year update for business and/or property income (“End of Period Statement”)
– submit an overall end of year tax reconciliation (“Crystallisation Statement”) – but alas called “Final Declaration” in later HMRC Guidance

The extra twelve months provides some breathing space, but do be aware that this is still a major set of changes that need advance preparation.  Businesses and Landlords should be thinking about digitisation now, and how they will be complying.

Read more about MTD for Income Tax here