WD + Co Autumn Budget Summary 2021 - Flipbook - Page 8
Making Tax Digital for income tax
MTD for corporation tax
The Making Tax Digital (MTD) regime is based
on businesses being required to maintain their
accounting records in a specified digital format and
submit extracts from those records regularly to HMRC.
It had been expected that sole trader businesses and
landlords with business income of more than £10,000
per annum would be required to enter the MTD
regime for income tax purposes from 6 April 2023.
However, HMRC recently announced that this will be
deferred until 6 April 2024. Early adoption of digital
record keeping and voluntary submission of MTD for
income tax data remains possible.
HMRC has previously announced that MTD for
corporation tax will not be mandated before 2026.
Following the deferral for sole trader businesses and
landlords, general partnerships will not be required
to comply with MTD for income tax until 6 April 2025
and the date other types of partnerships (for example
limited liability partnerships) will be required to
comply will be confirmed in the future.
HMRC has also confirmed that the new system of
penalties for the late filing and late payment of tax for
income tax self assessment will be aligned with when a
taxpayer becomes mandated into MTD for income tax.
For individuals without trade or property income or
otherwise exempt from MTD for income tax, the new
penalty regime will apply to their income tax affairs
from 6 April 2025.
Accounting periods that are not
aligned to tax years
Aligned to the revised start date for MTD for income
tax, changes will be made to simplify the rules
under which trading profits made by self-employed
individuals and partnerships are allocated to tax years.
The changes mainly affect unincorporated businesses
that do not draw up annual accounts to 31 March or 5
April. The transition to the new rules will take place in
the 2023/24 tax year and the new rules will come into
force from 6 April 2024.
Affected self-employed individuals and partnerships
may retain their existing accounting period but the
trade profit or loss that they report to HMRC for a tax
year will become the profit or loss arising in the tax
year itself, regardless of the chosen accounting date.
Broadly, this will require apportionment of accounting
profits into the tax years in which they arise.