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At the end of December 2022, HMRC and the Treasury announced that Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) has been postponed until April 2026 and some of the expected eligibility requirements have also been amended. This will no doubt come as a relief for some.
In a written statement, HMRC stated:
“MTD for ITSA will now be introduced from April 2026, with businesses, self-employed individuals, and landlords with income over £50,000 mandated to join first. Those with income over £30,000 will be mandated from April 2027.”
This gives the self-employed sole traders and affected landlords more time to prepare for the switch. Furthermore, some very small businesses and landlords will now be below the initial thresholds and may not need to comply until all taxpayers are required to comply.
Why has the MTD for Income Tax been delayed?
The accounting and taxation profession had been putting pressure on the government to delay MTD, as it did not feel that tax payers or HMRC were ready for such changes. HMRC has officially stated that the reason behind this delay is to relieve pressure on businesses caused by the current economic environment.
Furthermore, HMRC currently believes a more gradual implementation of MTD will give affected taxpayers, accountants, and the government more time to prepare.
Does this mean you can forget about MTD?
Sorry, no! MTD is not going away, it has just been postponed and the criteria tweaked a little. It is still important to check that you are making plans to ensure you are ready for the changes before they become mandatory.
We are expecting HMRC to pull everyone into the new MTD system at some point in the future, regardless of income.
What about Partnerships……?
If your business trades as a partnership, then the above compliance dates will not apply. As it currently stands, HMRC have not got a compliance date for individuals trading within a partnership.
Article by L.A.Lamerton & Co Accountants – Tel 01752 255667 – This information is designed to assist understanding and does not cover all aspects applicable. We would strongly recommend that you refer to the governments published information at www.gov.uk e.& o. e.
