Making Tax Digital delayed until April 2026

Making Tax Digital (MTD) for Income Tax will be implemented two years later than planned, and there will also be significant modifications to the income thresholds for people who would be impacted.

The original plans were for self-employed business owners and landlords with a combined business and/or property income of more than £10,000 per year to comply with MTD from the beginning in April 2024, when MTD for Income Tax was set to begin.

However, on December 19, 2022, Victoria Atkins, the Financial Secretary to the Treasury, issued a ministerial statement outlining important changes to the scope and timeframe of MTD for Income Tax. The main points are:

• MTD for Income Tax will now be implemented beginning in April 2026, which is two years later than anticipated.
• Self-employed people and landlords who’s turnover is  more than £50,000 a year will be required to comply first.
• In 2027, those with a turnover of  more than £30,000 will be required to conform.
• Before announcing any new initiatives, the government will assess the requirements of self-employed people and landlords with income below the £30,000 cap.

Although partnerships are not going to be subject to MTD in 2025, as originally planned, The government “remains committed to introducing MTD for Income Tax to partnerships at a later date,”

When taxpayers are forced to comply with MTD for Income Tax, a new penalty structure that aims to harmonize penalties for MTD for Income Tax with those for MTD for VAT will come into effect.

You can read the updated information on MTD for Income Tax on the government’s website here: https://www.gov.uk/guidance/check-when-to-sign-up-for-making-tax-digital-for-income-tax

If you want to discuss MTD for Income Tax, or any other tax matter, call JW Hinks on 0121 456 0190. Our professional and experienced team of tax experts are ready to help ensure that you are not paying more than you need to while staying within all HMRC’s regulatory requirements.