10 Years Is a Long Time in Politics!
It was back in 2015 that the then Chancellor, George Osborne, proposed a modernisation to the UK tax systems with his plans to introduce Making Tax Digital. Thus, there was significant expectation around the announcement made yesterday afternoon which was hailed as the next big step in its introduction.
However, given the reality that the project has been beset by technical issues and associated delays, it was probably no surprise therefore that the written statement announced that the main part of the proposal, dubbed MTD ITSA, is to be further deferred and will not be introduced until (at least for now) the year ended 5 April 2025.
Whilst most VAT registered businesses have got used to accounting under MTD over the past couple of years, expanding this more generally to cover income tax, and in particular the self-employed and landlords, was to be the next important phase bringing millions of more taxpayers into MTD.
Also deferred is the new associated penalty regime, which will now also commence in April 2024 for those mandated into MTD ITSA and from April 2025 for all other taxpayers filing under self-assessment.
In addition, the announcement also commented the far more recent proposal, being just suggested a couple of months ago, to change the income tax basis of assessment to a tax year end. Again, unsurprisingly, this has also been now deferred at least until 2024/25.
In the statement made by Lucy Frazer, The Financial Secretary to the Treasury, it was stated:
‘The Government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the last year. In recognition of this and of stakeholder feedback, we will now be introducing MTD for ITSA a year later, in the tax year beginning in April 2024.‘
Accountants generally have been saying this whole MTD project, so reliant on appropriate software and IT integration, is being rushed, so perhaps finally the Government is listening.
Have you got any questions about MTD? Email our Tax Team at TaxTeam@elmanwall.co.uk