The government announced late last week they are to extend the deadline for implementing MTD for income tax self assessment (ITSA) that was initially scheduled to have effect from April 2023. The measure was to have affected circa 4.2 million taxpayers with business and/or property income of more than £10,000 (gross) per annum. It will have brought sole traders, partnerships and landlords within these new requirements. These requirements will now come into effect April 2024.
Under the MTD proposals, taxpayers will be required to maintain records digitally, file regular quarterly digital updates and provide other (current) tax return information to HM Revenue & Customs via MTD compliant software.
The news is most welcome and gives taxpayers and the professional community more time to prepare, during what will still potentially be a very busy period. The MTD proposals to bring all small VAT registered businesses into MTD along with the proposed basis period rule change are still planned to come into effect from April 2022 along with HMRC’s new points-based penalty regime for late filing of VAT & income tax self assessment forms and higher and more immediate late payment penalties.
Having said that, HMRC have also announced that as far as ITSA is concerned, the penalty changes will be deferred until April 2024 too. But they will still have effect for VAT from April 2022. The delay will enable everyone to embed the new rules and requirements and get comfortable with those, ahead of yet more changes.
Martin Tomes is HSKSG’s Director of Tax. He specialises in assisting and advising individuals and their businesses in all areas of taxation with an emphasis on tax planning, mitigation and compliance and also heads up the firm’s specialist property sector group.