Making Tax Digital for Income Tax

Making Tax Digital (MTD) for Income Tax has been put back a year. It is now due to be introduced from April 2024 for self-employed business owners and landlords with annual gross income over £10,000. 

The delay gives businesses more time to prepare for HMRC's digital tax reporting requirement.

 

For a free initial meeting to discuss how we can help you contact us online or call us on T: 023 9248 4356T: 023 9248 4356


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What is MTD for Income Tax?  

The aim of MTD for Income Tax is to create a paperless tax reporting system and make it easier for individuals and businesses get their tax right and keep on top of their affairs. Under the scheme, all affected individuals will be required to store records of their business income and expenses in digital format and report a summary profit report to HMRC once every three months. This is sometimes called ‘real time’.

Self-employed traders and landlords with income (before expenses) of over £10,000 will be required to adopt MTD for Income Tax. Partnerships and trusts are also included. Where there is more than one trade, or the taxpayer is both (for example) a sole trader and landlord, the test will apply to the combined income.

Taxpayers affected will need to use MTD-compatible software to send their updates to HMRC. The deadline for this quarterly summary information is one month following the quarter end. The tax return will still be required but this will be known as an End of Period Statement (EOPS).

It should be noted that there are no announced plans to change the existing timetable of tax payments. Income tax will still be payable by 31 January following the end of the tax year. Any payments on account will be due by 31 January and 31 July as usual.

How we can help

If you are affected and currently use a desktop bookkeeping system you will need to ensure its updated in time for MTD for Income Tax or investigate how to integrate it with bridging software. Although HMRC are still compiling their list of MTD for Income Tax compatible software you should not delay as some older software simply won’t be updated and you may need to change to a newer package. If you do not currently use any form of software, you will need to consider moving to a digital bookkeeping system in time for the charges.

Moving to online accounting can offer many other time-saving and efficiency benefits. Used correctly, it can provide you and your accountant with an overall, detailed and up-to-date view of your accounts for better financial decision making.

There are many online accounting products on the market but two we would recommend are Xero and QuickBooks Online. We can provide versions of these specifically tailored to meet your needs and offer help with the initial set up and training.

The software is available by monthly subscription. Both Xero and QuickBooks Online offers subscribers constantly updated systems to guarantee that you are always using the latest version.
   
If you would like more details or to arrange a free software demonstration, please email Martin Southern at mjs@morriscrocker.co.uk or James O’Leary at jol@morriscrocker.co.uk or tel 023 9248 4356.
 
You can also find more information at our cloud accounting page.

   

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