Whatever Happened To Making Tax Digital (MTD) For Income Tax?
MTD for Income Tax was delayed by the Treasury to enable them to deal with Brexit and the necessary amendments to legislation and HMRC infrastructure that would entail. Now, with COVID-19, it has been delayed further. However, it is impressive to see how quickly HMRC can produce an online platform when they need to!
The systems that were put in place to deal with the Coronavirus Job Retention Scheme and the Self-Employed Income Support Scheme were done in record time and, although not perfect, served their purpose well. What is interesting to note is how much easier it would have been to support the self employed had MTD for income tax been in place. Quarterly reporting of income and expenses would have enabled HMRC to quickly and easily identify those who needed the support in real time and avoid the gaps for newly self employed and the use of historical data.
This may be why, Financial secretary to the Treasury, Jesse Norman, set out the government’s plans to press ahead with the MTD initiative, and extend the rollout, in a written statement on 21 July 2020. A quote from the statement shows that the COVID-19 pandemic “highlighted the need for a more flexible, resilient and responsive tax system that provides businesses and HMRC with more up-to-date information on businesses and their finances, and enables easier identification and better targeting of taxpayer support.”
The Treasury plan to expand the MTD for VAT reporting regime to all VAT-registered businesses from April 2022 and commence MTD for income tax for all unincorporated businesses and landlords turning over more than £10,000 the following year. This will allow time for all businesses and landlords to put procedures in place and we can offer our support should you need it.
For more information or for support in your preparations for Making Tax Digital reporting, please contact our Making Tax Digital Taxperts.