The government has announced MTD for Income Tax has been pushed back to 2026!
Phew, you might think…
Whilst the burden of digitalizing records by April 2024, for all self-employed individuals and landlords with an income of more than £10,000 seemed like a costly painful transition process, there are definitely merits to embracing technology in your business even if you are not forced to do so by legislation.
Until 19/12/2022 the deadline for mandatory use of software to be compliant with MTD (Making Tax Digital) for Income Tax Self-Assessment (ITSA) for all self-employed and landlords with an income over £10,000 was April 2024.
However, phase 1 has been pushed back to April 2026 and it will only apply to self-employed individuals and landlords with an income of more than £50,000. Those with an income over £30,000 will have until April 2027 to become compliant.
Mandating of MTD for ITSA will not be extended to general partnerships in 2025 although a new deadline has not been provided.
MTD for ITSA means keeping digital records and sending a quarterly summary of business income and expenses to HMRC using MTD compatible software. An estimated tax calculation will be received each quarter. At the end of the year, non-business information will be sent to finalise tax affairs and replace the need for a Self-Assessment return.
So why might you embrace digital records in your business even if you don’t have to?
- Time-saving.
- Makes it easier for you to plan for your tax liability– can see where you are in real-time.
- Growth plans? – Makes it easier to prepare a budget or financial plan and you can see how you are doing against it. No more spreadsheets.
- More sustainable – you can digitally record your receipts and invoices, cutting down on paperwork, no need for paper statements, paper invoices or paper receipts. No need to drive your files or bags of paperwork to the accountant.
Whilst there are a number of software providers in the marketplace. Our favourite is Xero, it is written for business owners, not accountants.
It is simple to use, jargon-free and has extensive help available online.
Still not convinced?
Why not give one of Xero Certified Advisors a call to discuss how it could benefit you?
We can give you hands-on help with our team of Xero Certified Advisors with one of our Xero transition packages.
