The requirement to keep digital records and use specialised software to provide HMRC with income details for businesses has been delayed by an extra year.
Making Tax Digital is HMRC's flagship project to modernise the administration of tax in the UK. Millions of businesses have already been using the digital system to send VAT return data since 2019, with the remainder joining the VAT scheme from 2022.
In light of the issues businesses face due to the pandemic, an extra year is being given for the widespread adoption of Making Tax Digital for Income Tax. From April 2024, it will be mandatory for businesses and landlords with income over £10,000 to use the new system.
The new system requires income data to be submitted via software four times a year through special accounting software, of which there are many providers.
Partnerships will get an extra year with an unconfirmed adoption date of April 2025.
Taxpayers must report income and expenses data quarters, with reports made up to three months ending in:
- income for jul 6th to oct 5th due by nov 5th
- income for oct 6th to jan 5th due by feb 5th
- income for jan 6th to apr 5th due by may 5th
- income for apr 6th to jul 5th due by aug 5th
Taxpayers can also change their quarters to the following, but deadlines for each remain as above:
- income for jul 1st to sep 30th due by nov 5th
- income for oct 1st to dec 31st due by feb 5th
- income for jan 1st to mar 31st due by may 5th
- income for apr 6th (1st in subsequent years) to jun 30th due by aug 5th
The last self assessment tax return submitted for those required to use the new system will be the 2023/24 (income from April 2023 to April 2024), unless using a non-April 5th year end date.