An early Christmas present was delivered today to small businesses and landlords as the First Secretary to the Treasury issued a written statement confirming the changes to the planned introduction of Making Tax Digital to self assessment at lunchtime on Monday 19 December.
The timetable change followed weeks of urgent calls from professional bodies such as our own Institute and tax software companies.
Eventually folding under the pressure, financial secretary to the Treasury Victoria Atkins released a statement setting out adjustments to the scope and timing phases of MTD ITSA:
- Mandatory Making Tax Digital for Self Assessment delayed for two-years until April 2026.
- Minimum income reporting level increased to £50,000, with those earning more than £30,000 mandated to join the scheme in 2027.
- The situation for landlords and sole traders earning less than £30,000 will be reviewed to see if MTD ITSA can be shaped to meet the needs of smaller businesses.
- Partnerships will not be brought into MTD for ITSA as previously planned in 2025.
- Points-based penalty system to be extended to MTD ITSA filers when they join.
While Atkins said the government remains committed to introducing MTD for ITSA to partnerships, the decision on when they might join the scheme will be taken at a later date, as for those on less than £30,000.
“The government understands businesses and self-employed individuals are currently facing a challenging economic environment, and that the transition to MTD for ITSA represents a significant change for taxpayers, their agents, and for HMRC,” the minister wrote.
To maximise the benefits of MTD for small businesses, the government opted to allow more time to prepare, “so that all businesses, self-employed individuals, and landlords within the scope of MTD for Income Tax, but particularly those with the smallest incomes, can adapt to the new ways of working.”
This will be very welcome news to the thousands of taxpayers that were to be affected from 2024.