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September 24th 2021

Making Tax Digital for income tax delayed

In a statement released on 23 September, Lucy Frazer, Financial Secretary to the Treasury, confirmed that the introduction of Making Tax Digital for income tax will be delayed for a year. It will now (barring further delays) come into effect in April 2024.

General partnerships will not now be required to join the regime until April 2025; the date at which other partnerships will be required to join has yet to be confirmed.

The announcement will be welcomed by business leaders and leading accountancy and tax bodies who have openly criticised both the timetable and the approach HMRC is taking in its drive to digitise the tax system. Most commentators who understand how business works are very concerned about the additional burden that the regime will impose, and deeply sceptical about whether the proclaimed benefits (in terms of reduced errors and increased tax take) will be realised.

Figures recently published by HMRC indicate that, despite the introduction of the first phase of MTD for VAT, in 2020/21 the amount of tax lost due to taxpayers' failure to take reasonable care actually increased, to £6.7bn - up from £6.1bn in the previous tax year.

In the same statement, Ms Frazer confirmed that basis period reform is also to be delayed by at least one year; it will not come into effect before April 2024, with a transition year not coming into effect earlier than April 2023.

Read the full statement here.

If you'd like to discuss any of the above matters, contact us today.

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