Making Tax Digital has been slowly becoming mainstream with HMRC pushing it into new areas as time goes by. They have recently announced that the self-employed and landlords will be part of the scheme from April 2023 ...
The Government believes Making Tax Digital will make it easier for individuals to keep on top of their tax affairs and will help cut back on filing mistakes. In 2018-19, this cost the Treasury some £8.5 billion, so you can understand why they are extending MTD.
It is proposed that:
- the Self Assessment tax return will be replaced by five new reporting obligations made during and after the tax year
- your first tax return under such a system is due in the fourth month of your accounting period, you will then have to file with HMRC every three months
- if you are not already using software for your record-keeping/accounting, you will need to learn how to use a spreadsheet or some type of accounting software or App
- you will need a reliable internet connection and a facility to store your electronic data
- this measure is due commence on 6 April 2023
There are exclusions to the electronic bookkeeping and filing part of Making Tax Digital if you are unable to do so because of age, disability or religion, however you will need to satisfy HMRC before they will agree to your request to be excluded.
For the first year, the self-employed and landlords will be permitted to pay their taxes as usual and without penalty, but after that, HMRC are expecting four payments per year with a top-up/refund being made after filing for your financial year end.
The usual penalties for late filing and payment will then apply.
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