- Foxmain Associates
Businesses get more time to prepare for digital tax changes.
The Government has delayed the introduction of Making Tax Digital for Income Tax self-assessment (MTD for ITSA) to 6 April 2024 to give individuals and businesses more time to prepare after the challenges they faced during the pandemic.
Financial Secretary Lucy Frazer announced the delay to the House of Commons on the 23 September 2021, adding that the Government remains committed to the system designed to simplify the UK tax system.
The basis. Reform, which would require unincorporated businesses to align their accounting periods with the tax year, will also be delayed to at least 2024, with the transition year not coming into effect before 2023, Frazer added.
The Institute of Chartered Accountants in England and Wales welcomed the delay, saying the original start date for MTD for ITSA was “far too soon and risk causing serious damage to the UK tax system”.
MTD for Income Tax will now be mandated for businesses and landlords with a business income over £10,000 per annum in the tax year beginning in April 2024.
General partnerships will not be required next to join MTD for ITSA until the tax year beginning in April 2025, while the date other types of partnerships we will be required to join will be confirmed in the future.
In March 2021, the Government announced a new system of penalties for the late filing and late payment of tax for ITSA. The new system for those who are mandated 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.
Eligible businesses and landlords will have the opportunity to gain the benefits of MTD early by signing up to the pilot, which is already underway and will be gradually expanded during the 2022 to 2023 tax year, ready for larger scale testing in the 2023 to 2024 tax year.