Making Tax Digital for income tax self-assessment delayed until April 2024

In a statement released on the 23rd of September (2021), the government has confirmed Making Tax Digital (MTD) for income tax self-assessment (ITSA) will be delayed by a year. In an attempt “to help those impacted by the changes” and “ for their representatives to develop their own support and guidance”, MTD for ITSA will be now be rolling out from April 2024. Keep reading, and we’ll summarise the latest announcement from the government and how it’ll impact landlords and self-employed professionals in the UK.

Last month, Churchill Knight published a blog to help landlords and self-employed professionals prepare for Making Tax Digital (MTD) in April 2023. However, as we often see with tax rules and regulations, the government has changed the goalposts. As a result, MTD for income tax self-assessment (ITSA) will be delayed by 12 months and will now be rolling out in April 2024.

What is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is the government’s plan to revolutionise the way businesses and self-employed professionals pay taxes. Over the last couple of decades, companies have become increasingly digitalised. As a result, the government has put MTD in place to ensure the United Kingdom has one of the world’s best, most modernised tax systems.

Making Tax Digital was first rolled out in 2019 for VAT registered businesses. Since April 2019, over 1.5 million VAT registered businesses have been required to keep digital VAT records and submit them to HMRC using MTD friendly software.

Currently, there are over 500 MTD compatible software solutions available. However, many small businesses have chosen to use a contractor accountant or small business accountant to help with the digital side of running their business. And, with MTD for ITSA coming in April 2024, more software is likely to enter the marketplace to account for the increase in demand.

“The Government recognises the challenges faced by many UK”

The Financial Secretary to the Treasury, Lucy Frazer, wrote the government’s statement regarding the delayed MTD ITSA rollout. She confirmed the government had listened to concerned stakeholders regarding the original 2023 MTA ITSA implementation and the lack of time to suitably prepare:

“The Government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the last year. In recognition of this and of stakeholder feedback, we will now be introducing MTD for ITSA a year later, in the tax year beginning in April 2024.

General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025. The date at which all other types of partnerships will be required to join will be confirmed later.”

Please visit the government’s website to read the full statement regarding the delay to MTD, published on 23^rd September 2021.

How will the delay to MTD ITSA impact landlords?

From April 2024, landlords with an annual business or property rental income above £10,000 will need to comply with the new MTD rules to file their self-assessment tax return. Landlords will be required to provide HMRC with quarterly updates of income and expenses via the official MTD account, and tax will be calculated in real-time. Rather than submitting a self-assessment tax return by the end of 31st January, each quarterly submission will need to be accurate and dependable, and a declaration will need to be signed. Tax will be owed at the end of January the following tax year.

Churchill Knight has already helped hundreds of businesses prepare for MTD

As a specialist contractor and small-business accountant with over 20 years of experience, our propriety is to ensure our clients are up to date with the latest tax rules and government legislation. We help hundreds of small business owners with their MTD VAT submissions, and we are helping many more prepare for the upcoming changes to MTD ITSA.

Whether you’re a contractor with a personal service company or you’re part of a small business or partnership, Churchill Knight can help your business flourish. We also have specialist landlord accountancy services available for small businesses (SPV) and sole traders – and we recommend you check them out because they could significantly help you with your buy to let property portfolio.

To find out more about our accountancy services or schedule a free consultation, please complete the short form here, call 01707 871622, or request a callback.