In a written statement to the House of Commons on 23 September 2021, it was announced that MTD for income tax self-assessment (MTD ITSA) would be postponed yet again to April 2024.
New financial secretary, Lucy Frazer announced,
“We recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so. We remain firmly committed to Making Tax Digital and building a tax system fit for the 21st Century”
This is the latest in a series of delays and deferrals in the MTD programme, which was proposed by Chancellor George Osborne in late 2015. The MTD start date for small businesses was first planned to be in April 2018, then the focus switched to MTD for VAT. The MTD for income tax programme was to be delayed until lessons had been learnt from the VAT roll-out.
I and many of us in the accounting profession have written to our MP’s imploring them to re-think MTD. All we got was the pre-prepared line given to them from HMRC about the so-called benefits. Maybe now that there has been a second delay some MP’s will sit up and take note and not just accept HMRC’s reasons without question.
The turnover for mandation into the MTD ITSA regime remains at only £10,000 per year, much to the disappointment of many who were lobbying for a much higher entry threshold.
Many landlords also own property in joint names. Splitting this income can be tricky, especially where couples have put in place a deed of trust arrangement. We have constantly pointed this out to HMRC. Right now they seem to want to listen to the software providers. They are of course have been rubbing their hands at the thought of all those new clients and have convinced HMRC that the software is easy to use and will sort all this out. You cannot watch a TV programme or listen to a radio broadcast without being bombarded by adverts for this or that accounts software..! Maybe now we will get some respite. I am afraid the reality is very far from that given in the adverts.
Hopefully, we can now get HMRC to implement a more workable MTD strategy, review the turnover level and look again at quarterly reporting. I mean is quarterly reporting really necessary for a landlord with rental income of less than £10k per annum? Even companies on the stock market only report their financials twice a year!
If you found this article informative then why not read our closely related article on allowable expenses on rental income or our guide to HMRC voluntary disclosure?
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