You may have heard that the MTD for Income Tax deadline has been postponed recently. This step of Making Tax Digital will now begin in the 2024/5 tax year, rather than April 2023, as originally planned.
April 2024 may appear to be a long way off, but two and a half years isn’t exactly a long time, so it’s prudent to plan ahead.
What does this mean for the Self-Employed?
To be clear, Making Tax Digital for Self Assessment will be implemented on April 6, 2024. Self-employed and landlords with a tax year turnover of £10,000 or more will be subject to this deadline.
The deadline for general partnerships to join MTD ITSA has been set for April 6, 2025. The deadline for other sorts of partnerships to join will be announced at a later date. LLPs and partnerships with a corporate member are examples of this.
The process of applying MTD ITSA to partnerships is expected to be more difficult, which is why HMRC is providing a ‘period of grace’ while they work on it.
Basis Period Reform deadline delayed
It’s also been established that the new “Basis Period Reform” will be postponed for a year. This legislation aims to guarantee that enterprises are “taxed on earnings originating during the tax year rather than profits of accounts ending during the tax year.” In other words, it is intended to make MTD more accessible.
This proposal was supposed to take effect in the fiscal year 2022/23. It won’t take effect until April 2024, with a transition year no earlier than 2023/24.
Is the starting date linked to the accounting period?
Another significant change is that, beginning April 6, 2024, all qualifying businesses that existed prior to April 20, 2023, will be required to join MTD for ITSA. Previously, the starting date may vary based on the accounting cycle of a company.
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