On December 19th, 2022, the government announced that Making Tax Digital for Income Tax and Self Assessment (MTD ITSA), is being delayed until April 2026. They have also changed the requirements for those who will be required to file accounts quarterly through MTD ITSA.
Previously, all self-employed businesses and landlords who had an income of more than £10,000 would be required to submit their accounts information to HMRC on a quarterly basis from April 2024.
Now, self-employed businesses and landlords who have an income of more than £50,000 will be required to submit their account information on a quarterly basis to HMRC from April 2026. Any businesses that have an income from £30,000 to £50,000, will not be required to submit their information until April 2027.
You can read the announcement by HMRC here.
Even though MTD ITSA has been delayed, it is still extremely important that businesses maintain their accounts on a regular basis instead of waiting until after the end of the financial year. So that a business can grow and business owners can make informed decisions about the business, they need to have an understanding of the financial position of the business. If the accounts are not completed until after the end of the tax year, the business won’t be in a position to save money through the year in order to pay the tax they might owe. There is also the important part of keeping an eye on your VATable income so that you know when you must register for VAT. If you discover after the end of the tax year, that you should have registered for VAT 7 months beforehand, that could cause a lot of issues for you.
It is also a good idea for those businesses who do not currently keep their records digitally, that they start to do this so that by the time MTD ITSA is in place, they are already in the habit of ensuring they have copies of all receipts digitally and don’t need to worry about if they have lost something.
When you keep your accounts on a regular basis, you are also less likely to forget what transactions are for.
There are many benefits of keeping your accounts up to date on a regular basis, and business owners shouldn’t just wait for them to be mandated to submit their information to HMRC quarterly before they start to get into those good habits.
If you would like further information about how to start keeping your accounts on a regular basis, please feel free to e-mail me.