Making Tax Digital delayed again!
The UK government has announced that the planned roll-out of Making Tax Digital for Income Tax (MTD ITSA) will be delayed by two years, from the intended start date of April 2024 to April 2026. To accommodate the transition to MTD, the implementation will occur in two stages for individuals with business or rental income of £30,000 or more.
Making Tax Digital for corporation tax, which was originally planned to follow MTD ITSA, will also be delayed. The pilot will launch in 2024 with a possibility of introduction from 2026.
When will Making Tax Digital affect you?
Businesses and rental income over £50,000 per annum will begin the roll-out from April 2026, while those with business and rental income over £30,000 per annum will start a year later, from April 2027. The government will launch a review to explore how MTD ITSA can best work for smaller businesses and landlords with a taxable income of less than £30,000. Additionally, there will be a review for partnerships that have only individuals as partners.
What will you need to do?
Taxpayers will have to submit an end-of-period statement after their year-end that includes relevant accounting and tax adjustments to finalize their business' position for the year. Taxpayers have until the normal self-assessment deadline to do this. Any additional income and expenses that would currently be included in their self-assessment tax return must also be reported by the normal self-assessment deadline.
Partnerships where partners do not include all individuals and Limited Partnerships and LLPs are currently exempt, but the plan is to include these entities at a later date.
Why has Making Tax Digital been delayed?
These measures have been taken to provide adequate time for businesses to prepare for the transition to MTD ITSA without affecting their operations negatively. These delays demonstrate the government's commitment to ensuring a smooth and efficient transition.
When should you start preparing for Making Tax Digital?
It is never too early to start making changes to your business accounting. Adopting one of the many digital accounting systems available has many benefits for streamlining your in-house accounting.
What are the benefits of digital accounting software?
There are numerous benefits of using accounting software:
- Saves time by automating processes, such as data entry, generating reports, and tax filing.
- Provides up-to-date financial information and generates key financial reports instantly.
- Improves accuracy by eliminating human errors in calculations or transposing numbers.
- Enables easy collaboration with team members.
- Provides the ability to track expenses and categorize them to get a clear picture of where your money is going.
- Offers improved visibility into more accurate financial data.
- Allows for faster and easier data entry processes.
- Offers in-depth and comprehensive financial reports. Consolidates data for faster and easier access to information.
- Provides more control over finances by automating invoices and reconciling bank statements.
Overall, accounting software offers a host of advantages over manual spreadsheets or paper-based methods, making it an essential tool for businesses of all sizes.
Explore how we can help you with your business accounting and bookkeeping here or contact Landsker for a no obligation discussion on how your business could benefit or to arrange a free online accounting software demo.