At the end of last month, HMRC announced that Making Tax Digital (MTD), has been postponed a year until April 2024. The news came on the 23rd September, with the MTD due to become law in April 2023. It was predicted to affect more than four million people who are self-employed, as well as landlords that have business/property income exceeding £10,000.
It was Lucy Frazer, Finance Secretary to the Treasury, who informed parliament of the news last month, while the government also published legislation for MTD for Income Tax as well as publishing a policy paper, as reported by Sage.
The news means that if you are a sole trader or landlord with business or property income above £10,000, MTD for Income Tax will start in the tax year beginning April 2024, as opposed to April 2023. While for general partnerships with income over £10,000, MTD for Income Tax will start in the tax year beginning April 2025. This was due to start at the same time as the general MTD, April 2023.
When asked why there has been a delay imposed, the government said: “The Government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the last year […] A later start for MTD for ITSA provides more time for those required to join to make the necessary preparations and for HMRC to deliver the most robust service possible, affording additional time for testing in the pilot.”
What is Income Tax?
Simply put, income tax is the tax on your earnings, but more specifically it is a tax levied directly on personal income. As put by Simple Tax, when your earnings exceed your personal allowance you are required to pay tax on these sources of income:
Income from a Trust
You will pay your income tax in one of two ways. Firstly, with pay as you earn (PAYE), with income tax being deducted from your salaried pay. The other way is via a self-assessment. If you are a self-employed UK tax payer, or gain an income from any of the sources mentioned above, you are required to file a self-assessment tax return each year.
Talking about tax can be confusing for most. But Kirk Hills Chartered Accountants have a proven reputation for offering up-to-date, proactive and expert advice on all areas of taxation. Speak to a member of the team today about any tax related questions and find out how we can help you.
Photo Credit: Nataliya Vaitkevich