Many will already be aware of HMRC’s MTD project; a new, ‘real-time’, digital system tasked with modernising UK tax administration.
MTD was initially piloted with VAT from 6 April 2019 for any taxable person with VATable turnover above the VAT registration threshold.
Following on from a recent government announcement on 21 July 2020, a date has now been confirmed for when the government will be extending MTD to Income Tax. From 6 April 2023, any businesses or landlords with business income over £10,000 who pay income tax will be required to report under the new MTD regime.
At this stage the changes only affect unincorporated businesses therefore larger corporates will not be affected. The start date for MTD for corporation tax is yet to be announced.
As of 6 April 2023, any self-employed individual whose turnover exceeds £10,000 will be required to do the following:
HMRC is also currently reviewing the current Self-Assessment payment deadlines, with any potential reform expected to be more in line with the PAYE system for employees. We will provide an update on this once further guidance is released.
Although the introduction of the regime is a little way off yet, from our experiences with MTD for VAT, it is important that clients are sufficiently prepared in advance to ease the transition. With this in mind, business owners may wish to start giving some consideration to the following:
The 6 April 2023 deadline gives business owners sufficient time to prepare for the extension of MTD to income tax.
We are hoping to see further guidance from HMRC regarding its implementation in the near future and will provide further updates in due course.
For more information on the issues raised in this update or to discuss your individual circumstances in detail, get it touch with your usual Crowe contact.