Making Tax Digital (MTD) was introduced for VAT in 2019, whereby VAT registered businesses moved to making electronic MTD returns.
The effect of the changes wasn’t as dramatic as initially expected with the submission being similar to that of an ordinary VAT return and bridging software available to allow Excel and other existing software programs to easily make the submissions.
The government’s intention is to extend MTD to other taxes, seeing it as a way to improve record keeping and reduce errors.
However, the government has recently announced a delay to MTD for Income Tax, with its proposed introduction being pushed back from April 2024 to April 2026.
The qualifying income threshold will initially be set at £50,000 before dropping to £30,000 from April 2027.
The changes will postpone the introduction, with a proposed 700,000 taxpayers being brought into MTD from 2026 and a further 900,000 in 2027. This is a reduction from the 4.2m originally intended to join from April 2024.
The delay has been brought about as there was concern that the introduction would potentially be more complex than for VAT and that HMRC was not fully prepared for the changes.
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