The government has recently announced that the implementation of Making Tax Digital (MTD) for Income Tax has been delayed again, this time until April 2026. The most recent plan was to introduce the new digital system, which would require individuals and businesses to keep their records digitally and submit their income tax returns online, in April 2024.
It had become clear that neither taxpayers and software providers were unlikely to be ready in time.
The delay will give businesses and individuals more time to prepare for the changes and to ensure that they have the necessary systems and processes in place to comply with the new requirements. It is claimed that it will also provide more time for the government to provide support and guidance to help people make the transition to the new system.
The government has also announced that it will be reviewing the scope and design of the new system, to try to ensure that it is as simple and user-friendly as possible. This will include looking at ways to reduce the administrative burden on businesses and individuals, and to make the process of submitting tax returns as straightforward as possible. This is to be welcomed because in its current form it would have placed higher burdens on taxpayers.
It’s important to note that the delay of MTD for Income Tax does not mean that the Making Tax Digital initiative as a whole is being delayed. VAT has already been implemented since April 2019 and other taxes may follow the same path. Businesses and individuals may still be required to comply with other MTD requirements, such as keeping digital records, and submitting VAT returns online.
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