HM Revenue and Customs (HMRC) has announced it is giving businesses an extra year to prepare for the digitalisation of income tax.
It said it will extend its Making Tax Digital (MTD) programme to income tax self-assessment (ITSA) at the beginning of April 2024.
This will give it more time to test the relevant systems and those required to join more time to prepare. A pilot project is already underway and will be expanded during the 2022-23 tax year.
Financial Secretary to the Treasury Lucy Frazer (pricutred) 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 Making Tax Digital and building a tax system fit for the 21st century.”
HMRC has also laid regulations on the technical details for how MTD for ITSA will work. They take in the creation and upkeep of digital records, along with sections of digital exclusions, quarterly updates and end of period statements.
MTD will apply to businesses and landlords with a business income over £10,000 per year, with a penalty system for those not using it scheduled to come into effect in April 2024.
General partnerships will not be required to join until April 2025 and the dates for other types of partnerships will be set in the future.
The department said its evidence shows that many businesses already operating MTD are now enjoying benefits and reductions in input errors. It was first launched for those with a taxable turnover above the VAT threshold of £85,000 per year in April 2019, since when 1.5 million businesses have signed up.
Image from GOV.UK, Open Government Licence v3.0
