In a statement to MPs, new financial secretary to the Treasury Lucy Frazer has confirmed that the introduction of Making Tax Digital (MTD) for income tax will be postponed by a year
The quarterly digital reporting for landlords and the self employed was due to start in 2023, but it will be pushed back by 12 months, the second delay to the digitisation programme.
‘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 Frazer in a written statement.
‘General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025.
‘The date at which all other types of partnerships will be required to join will be confirmed later.’
This delay will also affect the introduction of the new penalty scheme for late filing and late payment of tax for ITSA. This will now be introduced for those who are mandated for MTD for ITSA in the tax year beginning April 2024, and for all other income tax self assessment customers from April 2025.
Editorial comment – the delay of the implementation of this radical change to the tax system is welcome. It is very clear from our experiences and exchanges with HMRC in recent months that they are struggling to cope even more than ever with just basic data input and dealing with correspondence and enquiries. Attempting to bring in such complicated technological changes would, in the short term, in our view, only make the system even more unfit for purpose.