The next stage of MTD, requiring digital quarterly reporting of self-employment and rental income by individuals with gross income of over £10,000 was due to commence from April 2024. It has been announced this afternoon it will be delayed by two years, until 2026.
The Treasury has stated that the move to digital records ‘represents a significant change to taxpayers’ and so as businesses are ‘currently facing a challenging economic environment’ have taken the decision to delay the introduction of mandatory MTD submissions for two years.
The subsequent roll out of MTD to partnerships and companies will also be delayed, but no revised timetable for this has been announced as yet.
The scope of MTD ITSA has also been amended, this will now be a phased introduction:
- Individuals with a total of £50,000 or more gross income from self-employment and rental will need to keep digital records from April 2026.
- Those with self-employment and rental income between £30,000-£50,000, will be within MTD from April 2027.
- For those under £30,000 there will be a review by the Treasury about an implementation date.
It is suggested that individuals will be able to join MTD voluntarily if they wish.
The delay was somewhat expected in light of an update on HMRC’s website on Thursday which let the proverbial cat out of the bag. Although the webpage was removed it had been spotted and so the rumours were flying for this anticipated announcement.
Although this announcement delays the introduction of MTD by two years, there is still clear intension for this to be introduced. It is therefore important that this is still kept on the agenda for businesses and is one benefit of moving to digital accounting and bookkeeping software and apps.
On hearing the news Lee Styles , tax lead of our Small Business Team, commented:
“MTD is one of the biggest changes in the reporting of income for self-employed individuals since self-assessment was introduced. This delay, at this point in time, is of course a welcome one but it is important that any plans for digitisation are continued even with this delay.
The benefits I see my client’s having from the real time data from cloud bookkeeping solutions, such as Xero, are huge. MTD was moving more clients to implementing these solutions and I hope that trend continues.”
At Rickard Luckin we are keen to assist our clients with their accounting needs, but also with their business and to act as a trusted advisor. Helping clients take the step away from cash books and physical records to digital packages is an area we have assisted lots of clients with. If you are interested in taking this step then please reach out to your RL contact.
If you have any questions about the above, or would like more information specific to your circumstances, please enter your email address below and we will get in touch: