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12-month delay to Making Tax Digital (MTD) offers welcome breathing space for the self-employed

Posted on 18th October 2021 by Phil Ainley MCIM, CMktr, Dip DigM - Marketing Manager

freelance photographer submitting tax return MTD

The government’s 12-month delay to Making Tax Digital (MTD) for income tax self-assessment (ITSA) has come as welcome news for many self-employed professionals.

HMRC said it recognized the challenges that have arisen from the pandemic and decided to delay the digitisation of tax submissions by a year as a result, from April 2023 to April 2024.

The deferral was made to allow businesses and self-employed professionals more time to prepare.


What MTD changes have been announced?

Making Tax Digital for income tax self-assessment would have forced four million self-employed professionals, including business owners and landlords with incomes of over £10,000 per annum, to keep digital accounting records.

A report of the business’s trading income or property income, allowable expenditure and allowance claims are to be submitted in four quarterly updates to HMRC instead of the current single annual update.

This is the first phase of a wider initiative to enable self-employed professionals to reduce common errors and be more accurate in their self-assessment returns.

In a written statement, the Treasury announced the following:

  • Making Tax Digital for income tax self-assessment (MTD for ITSA) to be delayed one year until 6 April 2024;
  • Penalties for late filing and late payment will be introduced for those who are mandated for MTD for ITSA in the 2024-25 tax year;
  • General partnerships will not be required to join MTD for ITSA until 2025-26;
  • The reform of the complex basis period rules that govern how self-employed profits are allocated to tax years will not come into effect until April 2024, with as transition year no earlier than 2023.

You can read the Treasury’s statement online here.




MTD delay offers vital ‘breathing space’ for self-employed

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