Making Tax Digital (MTD) has been a fact of life for VAT-registered businesses for some time now, and HMRC still want self-employed businesses and landlords with annual business or property income above £10,000 to follow the same rules.
However, the government has recognised that more time is needed before this significant change comes into effect, particularly as they are also considering a change to basis periods which would take effect from April 2022.
Partnerships will also have their inclusion in the programme pushed back, with general partnerships coming in from 6 April 2025 and other types of partnership later, with the date yet to be announced.
This change has an impact on the new penalty regime which will apply to MTD taxpayers from April 2024 and to other self-assessment taxpayers from April 2025.
We welcome this announcement, which will allow more time for HMRC, taxpayers and their agents to adapt their systems to deal with what will be a significant change in their reporting requirements.
However, this is only a delay – the provisions will come in at some point and, if affected, you will need to keep digital business records and get compatible software, which you will use to send in quarterly business income and expenses updates. You’ll then finalise your business income after the end of your accounting period and submit a final declaration after the end of the tax year, instead of your usual self-assessment tax return.