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United Kingdom

27 September 2021

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UK Delays Making Tax Digital for Income Tax Self Assessment to 2024

UK HMRC issued a release on 23 September 2021 announcing that Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) requirements will be introduced in April 2024, which is a year later than previously planned in recognition of the challenges faced by many UK businesses and their representatives as the country emerges from the COVID-19 pandemic. The MTD for ITSA requirements will apply for businesses and landlords with a business income over GBP 10,000 per annum. The release also provides that general partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025, while the date other types of partnerships will be required to join will be confirmed in the future. Although MTD for ITSA requirements are delayed, eligible businesses and landlords will have the opportunity to gain the benefits of MTD early by signing up to the pilot, which is already underway and will be expanded during the 2022 to 2023 tax year, ready for larger scale testing in the 2023 to 2024 tax year. Further, the release notes that the new, fairer system of penalties for the late filing and late payment of tax for ITSA will now come into effect in the tax year beginning in April 2024 for those who are mandated for MTD for ITSA and will come into effect in the tax year beginning in April 2025 for all other ITSA taxpayers. The new penalty system was previously to apply from April 2023 for taxpayers mandated for MTD for ITSA (income over GBP 10,000 per annum) and from 2024 for other taxpayers.

For the purpose of the MTD for ITSA requirements from 2024, the Income Tax (Digital Requirements) Regulations 2021 were made and laid before the House of Commons on 23 September 2021 and will come into force on 6 April 2024.

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