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Making Tax Digital For Income Tax Self-Assessment Delayed

The government has delayed the introduction of Making Tax Digital (MTD) for Income Tax Self-Assessment (MTD for ITSA) for a year, HMRC has announced.

The government says it has made the move in recognition of the challenges faced by many UK businesses as the country emerges from the pandemic.

It will now introduce MTD for ITSA in the tax year beginning in April 2024, a year later than planned.

Who is affected by MTD for ITSA?

Businesses with income greater than £10,000 per year from:

How does MTD for ITSA change the current process for self-assessment?

MTD for ITSA requires businesses and landlords to keep their records digitally and to submit quarterly updates of business income and expenses to HMRC using MTD-compatible software.

Business owners and landlords will no longer file an annual self-assessment tax return, unless exempt from MTDfITSA. Instead, each business will need to file four quarterly updates and an End of Period Statement to finalise business profits. You will then need to submit a Final Return with any other income, gains or reliefs.

When will MTD for ITSA be compulsory?

Individuals with self-employment income or property income will need to comply for the year beginning 6 April 2024. General partnerships will need to comply from 5 April 2025.

The Government says the later start for MTD for ITSA gives those required to join more time to prepare and for HMRC to deliver a robust service, with additional time for customer testing in the pilot.

Lucy Frazer, Financial Secretary to the Treasury, said: “The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.

“But we recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so.

“We remain firmly committed to MTD and building a tax system fit for the 21st century.”

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