The MTD (Making Tax Digital) pilot scheme for the next phase of the HM Revenue & Customs (HMRC) initiative has seen a drastic slump in users.
Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax and Self-Assessment (ITSA) from 6 April 2024.
Some businesses and agents are already keeping digital records and providing updates to HMRC as part of the live pilot project to evaluate and develop the MTD service for ITSA.
However, research reported in the Financial Times has discovered that only nine people are currently taking part in the trial.
The number peaked at around 900 users in the 2018-2019 period and has since been affected by the pandemic.
Many accountants are now concerned that the system users – which covers 4.3 million self-employed businesses, partnerships, and landlords – may not be ready for the switchover.
Currently the self-employed must file just one end-of-year tax return but MTD ITSA will involve having to submit updates quarterly every three months and an end-of-year statement, plus a “finalisation return” (now called a tax return) each year. This means six reports to HMRC in total replacing the current single annual Self-Assessment tax return.
On top of this, the self-employed and landlords will have to license accounting software from approved providers, with the Government offering discounts of up to £5,000 for small businesses to rent software.
If you need help with Making Tax Digital, please contact Faye Thompson.
Link: Just nine people trialling digital tax for self-employed
