Making Tax Digital
The countdown to 6 April 2024 is underway, marking a significant milestone for sole traders and landlords with annual business or property income exceeding £10,000. From this date onward, reporting income and expenses to HM Revenue and Customs (HMRC) will undergo a substantial change, becoming a more regular undertaking.
In the current framework, Self Assessment tax returns are filed once annually, with the deadline set for 31 January.
With Making Tax Digital (MTD) commencing on 6 April 2024, the landscape will shift. Quarterly returns will now provide a breakdown of income and expenditure, with expected deadlines falling on 5 July, 5 October, 5 January, and 5 April. There will also be an option to align returns with the end of March. VAT-registered businesses may find it beneficial to synchronize their VAT reporting period with the quarterly reporting for MTD. As it stands, the information required on quarterly returns is anticipated to mirror that of the current Self Assessment system. This entails reporting turnover/gross rents after deducting expenses, using categories akin to those in the current tax return. Quarterly returns are set to be submitted one month after the end of each quarter. Adjustments for factors like stock, depreciation, prepayments, and accruals will be consolidated in an End of Period Statement. All remaining income will be encompassed in a Final Declaration due on 31 January, with the inaugural submission date under the new scheme slated for 31 January 2026.