Making Tax Digital Delayed

No doubt the big announcement in the run up to Christmas was the deferral of MTD for Income Tax Self-Assessment (ITSA). In what appears to be a never-ending story, the Government has announced a further delay in MTD for ITSA.

The mandation of MTD for ITSA will now be introduced from April 2026, with businesses, self-employed individuals and landlords with income over £50,000 mandated to join first, an apparent change from the current £10,000 limit.

Those with income over £30,000 will be mandated from April 2027.

The Government will also review the needs of smaller businesses and look in detail at whether the MTD for ITSA service can be shaped to meet the needs of smaller businesses.

Following the new approach, the Government will not extend MTD for ITSA to general partnerships in 2025.

However, this statement begs other questions, particularly whether the changes to income tax basis periods will be deferred. Legislation will be required to change the current position, so we may learn more at that stage. However, as things stand the basis period reforms will proceed.

However, it is worth noting that the new late filing and payment penalty system for VAT will go ahead in 2023.