Delay to Making Tax Digital Announced
What is Making Tax Digital. Making Tax Digital (MTD) is part of a government strategy to make it easier for businesses and individuals to keep on top of their tax affairs. It is part of a 10 year strategy to build a trusted, modern tax administration system. From a HMRC perspective it will make it much easier for them to have oversight onto the tax affairs of individuals and businesses, reducing the tax gap. HMRC introduced phase one of the scheme in 2019 and since then it has been compulsory for VAT registered businesses since then who are also above the VAT threshold. This is being extended to all VAT registered businesses from 2022. There are future plans to widen the target audience of MTD to include income tax and later corporation tax. This will have a significant impact on UK landlords who may find themselves having to produce quarterly submissions to HMRC.
The plan was for MTD for income tax to be introduced from April 2023. MTD for corporation tax is not expected before 2026. For a full read out of what to expect please read our previous article on what MTD means for landlords.
What has changed. A government statement released in Sep 21 has confirmed that MTD for individuals will now be delayed by 12 months until the tax year starting in April 2024, this is owing to the disruption caused on businesses by the pandemic . This means landlords have an extra 12 months to get ready for MTD.
What are we doing about MTD? I recently wrote about what we were doing to prepare for MTD. That plan will continue as planned although we will discuss the timing of introducing xero ledger for sole traders at our next touchpoint as there may be scope to delay if the client would prefer.
We will continue to keep you updated as more is learned about MTD.
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