Making Tax Digital for Income Tax, 2024

** This post has been updated – November 2021 **

 

The next phase of the Making Tax Digital roll-out will be for Income Tax from 2024.  This will be a new way of reporting earnings to HMRC.

What is Making Tax Digital?

Making Tax Digital (MTD) is a key part of the government’s plans, which they state, aim ‘to make it easier for individuals and businesses to get their tax right and keep on top of their affairs’. Ultimately it involves reporting information to HMRC in a specific electronic format.

The process of HMRC moving towards a digital tax administration system should simplify the processes of tax administration, however, as with any transformational change, it does mean that you may need to change the way that you report and submit your records in the future.

What’s already happened with MTD?

Although MTD for Income Tax is the next step on the MTD journey, it’s worth bearing in mind, that other MTD integrations have already taken place successfully.  Since April 2019, all VAT-registered businesses with an annual turnover of more than £85,000 have been required to submit digital VAT returns, using compatible software.

What’s happening next?

Making Tax Digital for Income Tax means that self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2024.

You will need to keep digital records to send Income Tax updates – a summary of your business income and expenses – and file quarterly returns to HMRC.    You will also need to submit a final declaration after the end of the tax year that it applies to.

How will Inspire help me?

We’re here to support you through the transition to Making Tax Digital and our team of experts are on hand to help you at every stage.  You don’t need to make any changes yet, we will of course keep you updated and advise what changes you need to make and when.

For more advice and top tips from our team of experts, have a listen to our latest 2 + 2 podcast – Digitalising Tax!

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