MTD for Income Tax delayed until 2026

The government has announced a two-year delay to the introduction of Making Tax Digital (MTD) for Income Tax, along with major changes to the income thresholds for those affected.

MTD for Income Tax had previously been scheduled to start in April 2024, and self-employed business owners and landlords with a total business and/or property income above £10,000 per year had been due to comply from that date.

However, Victoria Atkins, the Financial Secretary to the Treasury, released a ministerial statement on 19th December 2022 setting out significant adjustments to the scope and timing of MTD for Income Tax. The key points are:

  • MTD for Income Tax will now be introduced from April 2026, two years later than previously planned.
  • Self-employed individuals and landlords with income over £50,000 will be mandated to comply first.
  • Those earning more than £30,000 will be mandated to comply in 2027.
  • The government will review the needs of self-employed individuals and landlords with income under the £30,000 threshold before laying out any further plans.
  • Partnerships will not be brought into MTD for Income Tax in 2025 as previously planned, but the government “remains committed to introducing MTD for Income Tax to partnerships at a later date”. No mention was made of when MTD for Income Tax might apply to limited companies.
  • A new penalty system designed to harmonise penalties for MTD for Income Tax with those for MTD for VAT will come into effect for taxpayers when they are required to comply with MTD for Income Tax.

Updated guidance on MTD for Income Tax is now available on the government’s website. Here at FreeAgent, we’re assessing the impact of this news and we’ll update the relevant information on our website in due course.

Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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