Making Tax Digital (MTD) for Income Tax has been postponed for another year to give businesses and landlords more time to prepare. So what does this mean for you? Which businesses does it affect and what are the new dates that you need to be aware of?
We’ve summarised the latest information below, but our main piece of advice would be: go digital now! With nearly all businesses required to be digitally compliant in the near future, you’re just delaying the inevitable if you don’t go digital. You might even find that you enjoy this new way of bookkeeping. It’s easy, efficient and saves you time and money!
What Is MTD?
MTD is a government initiative designed to make it easier for businesses to accurately manage their tax and minimise mistakes. It means that eligible businesses are required to use approved bookkeeping software to manage their accounts digitally… it’s time to get rid of those annoying old spreadsheets!
MTD for all VAT-registered businesses is already coming into effect in April 2022. And for those who aren’t VAT registered, MTD was being rolled out for managing Income Tax in 2023; however, the government has now agreed to postpone MTD for Income Tax until April 2024 amid concerns that there wasn’t enough time for businesses to get ready.
Which Businesses Need To Be MTD Compliant By April 2024?
If your unincorporated business earns over £10,000 a year, you need to be MTD compliant by April 2024. This requirement also applies to landlords, even though you may not see yourself as a “business” as such. HMRC are encouraging eligible businesses to sign up as early as possible to ensure that you have everything in place before the deadline. 2024 may seem like a long while away but time really can fly and you need time to familiarise yourself with the software.
Which Businesses Need To Be MTD Compliant By April 2025?
The only businesses that have a little bit more time to prepare are partnerships. General partnerships earning over £10,000 per year are required to be complaint by April 2025, whereas a date for other types of partnerships, such as LLPs etc., hasn’t yet been set and will be announced shortly.
Basis Period Is Also Delayed
The government has also delayed its plans to simplify the basis period rules by aligning the basis period with the tax year. In a statement made by Lucy Frazer, the Financial Secretary to the Treasury, it’s looking like these changes will coincide with the new MTD date in April 2024, with a transition period no earlier than 2023. More information is expected to be announced shortly in the Autumn Budget.
Ready To Go Digital?
As we mentioned earlier, regardless of the upcoming deadlines, we think it’s really important that you go digital as early as possible. It isn’t just about being compliant; there are actually so many benefits to using digital software. It makes light work of administrative tasks, it minimises the risk of mistakes and makes your bookkeeping much more efficient.
Before you sign up for MTD, you’ll need to be using approved software. And that’s where we can help. We’ve teamed up with 5 leading providers so that we can offer you the very best solutions at discounted rates (limited licences available so you’ll need to act fast!). You can find out all about the different software packages we offer via our website. We’ll advise on which software would be better suited to your business and, best of all, we’re even able to offer you free trials too! Get in touch to find out more. We feel very confident in saying that once you’ve gone digital, you won’t look back!