Making Tax Digital for the Self-Employed and Landlords Delayed to April 2024

Posted by on Sep 29, 2021 in News Alerts | No Comments

The government has announced that Making Tax Digital for the Self-Employed and Landlords will be delayed to April 2024.  This is a year later than originally planned.

From 6th April 2024, for all self-employed businesses and landlords with a turnover of over £10,000, the Self-Assessment Tax Return is due to be replaced by Making Tax Digital.

General partnerships will be required to join Making Tax Digital from the tax year beginning in April 2025.  The date for other types of partnerships will be confirmed in the future.

How do I become MTD compliant?

Making Tax Digital will require five filings a year in an electronic format.  Four quarterly reports and a year-end final declaration. 

Whilst HMRC have approved a range of filing formats, submitting these reports on paper will not be an option.

If you are not already using systems for your record-keeping and accounts preparation, you will need to do the following:

  • subscribe to a Making Tax Digital compliant software;
  • have a mechanism to store original documents electronically; and
  • have access to an internet connection to make the filings.

The software can be set up to remind you when to file and there will be a cumulative calculation of the tax due for the year based on the data submitted.

What are the payments and when are they due?

The payment due date for 2024-25 tax due remains as the by 31st January of the next year following year.  However, HMRC are indicating that there will be a method to make voluntarily payments based on each submission.

A likely outcome of Making Tax Digital for the Self-Employed and Landlords is that, at some point, these payments will become compulsory.

For the first year, there will be the additional complexity that your 2023-24 tax return will still be due by 31st January 2025.

The first submission under Making Tax Digital is expected to be due in the fourth month of the accounting period to be followed by submissions on a three-monthly basis.

For example, if your trading year is aligned to the tax year, this means that the first report will be due in August 2024 and the overall calendar will be:

  • first quarterly report to be filed in August 2024;
  • second quarterly report to be filed in November 2024;
  • your 2023-24 tax return remains due by 31 January 2025;
  • third quarterly report to be filed in February 2025;
  • fourth quarterly report to be filed in in May 2025;
  • and the year-end declaration to be filed by January 2026.

We appreciate that this may seem an age away with an additional cost in terms of time and money.

However, our advice is to embrace the change now.  Ultimately, Making Tax Digital will give you a better overview of your business.

We are already implementing cost-effective solutions for clients to get them ready for Making Tax Digital.

If you have any queries or would like any assistance to ensure you are ready, please do not hesitate to contact us on tax@cooperfaure.co.uk.