Despite persistently denying there was any possibility of a delay to the Making Tax Digital (“MTD”) timetable, it has been confirmed that the introduction of MTD for income tax has been postponed another year to 2024.

“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”, said Lucy Frazer, financial secretary to the Treasury, in a written statement. Which is one way of saying HMRC aren’t going to be ready.

MTD started in 2019 with only VAT registered businesses that were over the VAT threshold needing to submit their returns using MTD compliant software (meaning the voluntarily registered businesses didn’t need to comply). MTD will still be extended to all VAT registered businesses in April 2022. Many of our VAT voluntarily registered businesses are already MTD compliant, but if you are concerned about your MTD status please get in touch.

The April 2024 start date is for the self-employed and those with property income, except the very smallest businesses (total gross income less than £10,000). Partnerships will follow in 2025 and corporation tax in 2026 at the earliest (most likely later). In addition to the requirements to keep digital records and submit returns digitally, quarterly returns will be required. After the four quarterly returns have been submitted a further, final, end of year statement will be required. The timing of payments is not however scheduled to be changed, so these remain at 31 January after the end of the tax year along with the current system of instalments.

MTD requires that Businesses and organisations (which includes those with income from property) are required to maintain digital accounting records. Maintaining paper records ceases to meet the requirements of the tax legislation. They are also required to use a functional compatible software product to submit updates and returns to HMRC. The software uses HMRC’s API (Application Program Interfaces) platform to submit information to HMRC. The current HMRC online tax return services for the relevant tax are withdrawn when a business signs up to MTD. We recommend Xero for its ease of use, bank feed functionality, extensive range of add on apps, and ease of access from multiple devices and locations.