Making Tax Digital is to help individuals and businesses get their tax right (and give HMRC confidence in the process!)
However, it has been delayed again, from April 2024 until April 2026.
The government stated that the main reason for the delay was to relieve pressure on businesses caused by the current economic environment.
When it does eventually debut, Making Tax Digital will replace the current self-assessment system.
The main deadline for finalising tax affairs is still the same (31st January) and this will also be the same for balance payments.
On the 6th of April 2026, MTD will be extended to self-employed individuals with business and/or property turnover or gross income of £50,000 annually. Those with income over £30,000, will be mandated to join in April 2027.
The basic period reforms will mean quarterly updates for trading and property income will be aligned with each other and the tax year.
Regarding general partnerships, MTD for Income Tax Self Assessment (ITSA) has not yet been put into a timeline. However, the government remains committed to introducing MTD for income tax to partnerships later.
Despite MTD being delayed again, the government has stated that now would be a good time to get ahead and start keeping your records digitally.
Three reasons why you shouldn’t wait to implement Digital Accounting Software:
Landlords will be able to drive profitability because they will have better real-time and actionable information as well as insights into the success of their business, which will overall lead to growth and profitability.
A higher number of bookkeeping tasks can be completed automatically, speeding up the overall process.
Time to Prepare:
While MTD has been pushed back several times, it is coming, and getting on-board with digital platforms sooner rather than later will help prepare landlords for the change when it does finally come in.
If you have been using real-time software, the bookkeeping and performance management process should be a lot more efficient. For those not yet using digital software, it could save landlords £000’s in bookkeeping fees or hours of their own time.
For this reason, we do wish to encourage as many landlords as possible to start using the software at least from April 2025, so that you have a year of familiarity come April 2026.
After all, we are all here to be in business, and MTD aside, the advantages of moving to efficient software that can help you manage your business better, is nearly always going to make commercial sense.
Of course, there could be many other changes that would add value to your business.
For example, if you’re currently paying higher rates of tax on your property income and are impacted by the mortgage interest relief restrictions, then restructuring as a business could see a significant return on your investment.
Find out if Less Tax 4 Landlords can help you by taking our Free Initial Assessment