Although there has been no official announcement yet, it’s probably the worst kept secret that Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) has been deferred by 2 years.
by Chris Davies
From the digital vision set out by George Osbourne in 2015, it has already taken 7 years to reach this point. Originally the target implementation date of April 2024 would have required the self-employed and landlords with gross annual incomes to maintain accounting records in digital format and submit quarterly reports of income and expenses to HMRC as well as the usual end of year returns.
Although the planned start date is only just over a year away, surveys undertaken reveal that knowledge of these changes by those affected seems to be remarkably low and according to figures I have seen from a reputable source only 97 taxpayers had been signed up for the HMRC MTD for ITSA pilot and only 37 quarterly reports had been filed. Bearing in mind that approximately 4 million taxpayers are expected to be subject to the new quarterly filing requirements that’s a staggering gulf to cross in just over 12 months.
Whilst there are many good reasons to delay MTD for ITSA, I can’t help feeling an element of disappointment as the UK already lags well behind a number of European countries that have successfully adopted and seen the benefit of digital taxation systems.
It’s also disappointing because of the number of hours spent educating clients on their software requirements and educating them on the use of such systems.
However, now is not the time to sit on your laurels. Rather than be rushed into decisions based on a tax reporting deadline, it’s an ideal time to think strategically about the best software for your business and our dedicated cloud accounting experts are ideally placed to help you through the decision making process.
The delay will also allow more time to focus on the successful implementation of the basis period reform for the taxation of the self-employed scheduled to start on 5 April 2024.
If you are self-employed and have any financial year end other than 31 March or 5 April then do please reach out to one of our tax experts to understand how this will affect you.
Next steps
We are already answering our clients’ questions with MTD training and would love to help you get to grips with it too.
