Making Tax Digital for income tax delayed until 2024

A welcomed decision for many, UK businesses will now have an additional year to prepare for Making Tax Digital (MTD) for income tax.

HMRC say that with the many challenges being faced by the UK’s businesses, MTD for income tax will come into play a year later than planned in the tax year beginning in April 2024.

Lucy Frazer, Financial Secretary to the Treasury, said, “The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.

“But we recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so.

“We remain firmly committed to Making Tax Digital and building a tax system fit for the 21^stcentury.”

The Association of Independent Professionals and the Self-Employed (IPSE) say that this delay is ‘welcome breathing space before another painful hit to the self-employed’ and urge that the government should raise the threshold for MTD above £10,000 to exempt the UK’s SMEs.

Andy Chamberlain, Director of Policy at IPSE, explained, “It is very welcome that the government has decided to delay the roll-out of Making Tax Digital for Income Tax. This will provide much-needed breathing space before another painful hit to the self-employed. After the financial impact of the pandemic many freelancers simply are not ready to make the shift to Making Tax Digital.

“Although we can see the benefits of digital record-keeping, we continue to have reservations about certain aspects of the change. The shift to quarterly reporting will be a serious and heavy additional admin burden for many freelancers. We continue to call on government to raise the threshold for MTD so the changes do not apply to the smallest businesses.”

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