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Making Tax Digital for Income Tax

We take a look at the introduction of Making Tax Digital for Income Tax, who needs to comply what the requirements are.

When does Making Tax Digital (MTD) for Income Tax apply?

You can choose to follow the rules voluntarily now, but it is mandatory for self-employed businesses or property business for the next accounting period that starts on or after 6 April 2023.

Who needs to comply?

You only need to comply if you have a self-employed business or property business with turnover above £10,000.

The rules also apply to unincorporated partnerships that only have individuals as Partners and trusts with business or property income.

Partnerships with corporate Partners and Limited Liability Partnerships will need to comply from a future date not yet confirmed.

What are the requirements?

On a quarterly basis you will need to send updates to HM Revenue & Customs of your business income and expenses.

Similar to MTD for VAT, you will need to keep digital records for all your business income and expenses in compatible software.

On a quarterly basis you will need to send updates to HM Revenue & Customs of your business income and expenses.

On an annual basis you will make a final declaration which replaces the Self Assessment tax return. The due date for the final declaration is 31 January following the end of the tax year. This will include other income or reliefs to claim.

Is the timing of payment different?

No, under the current rules the payment dates remain the same – i.e., for a 5 April 2024 tax year: Payments on account on 31 January 2024 and 31 July 2024 with a balancing payment on 31 January 2025.

What are the next steps?

 If your accounting records are paper-based or your accounting information is only prepared annually for your tax return, you should consider arranging for this to be prepared quarterly. This is to ensure that the process is in place ahead of the deadline.

In doing so, you should also receive more timely information on your business, allowing you to make strategic decisions quicker.

Useful links:

Would you like to know more?

If you would like more information on Making Tax Digital for Income Tax or advice on how to make sure you remain compliant, please get in touch with your usual Blick Rothenberg contact or one of our experts using the details on this page.

Visit our Making Tax Digital hub for more information.

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