6 July 2022
MTD Income Tax – changes on the horizon
At this stage, you should be made aware that the UK government has plans to make it easier for individual taxpayers to validate their tax declarations and to manage the relevant data through a process called MTD – making tax digital. The aim is to transform the process to make it more effective, efficient and easier for taxpayers to ensure that their tax liability is correctly stated.
MTD for Income Tax will commence from 6 April 2024 for those with income receipts above £10,000 per annum from either self-employment activities or property rental. The Income Tax (Digital Requirements) Regulations 2021 (SI 2021 No 1076) set out the digital requirements that relevant persons must comply with under MTD for Income Tax.
Where applicable, therefore, this will necessitate the need to maintain all business and rental income records digitally and by submitting those details to HMRC on a quarterly basis via HMRC approved software.
HMRC will then add these details to other available information held to produce a quarterly summary, which you will be able to amend via your personal tax account with HMRC, which will need to be created in advance.
Please note in particular the following requirements:
- Software – the need to use functional compatible HMRC approved software to keep and preserve business records (business income and expenses) digitally,
- Updates – the information required when submitting a quarterly update to HMRC,
- End of Period Notice (ESOP) – the information required when submitting an end of period statement to HMRC,
- Retail sales – the details required for a retail sales notice.
Later in in the year guidance will be published to explain how any accounting and tax adjustments may be made to reconcile the quarterly submissions to the final taxable profits for the year.
Full details are not yet available advising of how this will work in practice.
Hodgens Global intend to take part in pilot schemes with HMRC once the opportunity becomes available and may request your participation in the trial. We will keep you informed.
In the meantime, please refer to the following links to read more of HMRC’s intentions with the MTD scheme:
All you need to know about registering for MTD ITSA can be found on the gov.uk webpages below to start your MTD ITSA journey.
https://www.gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax
Also please see the link below for a list of all approved Software Developers as these are all recognised by HMRC as suitable for MTD purposes.
https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax