HMRC have delayed the Making Tax Digital (MTD) deadline for self-employed businesses and landlords. The deadline for these groups was originally April 2024, however, the government have announced that they are pushing it back due to the current challenging economic circumstances.
Here, the team at AMR Bookkeeping Solutions provide everything you need to know about the new deadline, and how to get prepared.
When is the New MTD deadline?
Self-employed businesses and landlords will be required to comply with MTD from the following dates:
- 6 April 2026 if you have an annual business or property income of more than £50,000
- April 2027 if you have an annual business or property income of more than £30,000
What is MTD?
MTD is a scheme launched by HMRC as part of its efforts to digitalise the tax system and improve its efficiency. It requires businesses to report all their taxes using a new digital system. The initiative has already made fundamental changes to the way the tax system works, and has helped to reduce the tax gap by requiring businesses to:
- Keep digital records
- Use software that works with Making Tax Digital
- Submit updates every quarter – bringing the tax system closer to real-time
Making Tax Digital affects all types of businesses, including sole traders, partnerships and limited companies that have a turnover above the current VAT threshold of £85,000. The transition to MTD has been gradual, with different deadlines for different types of businesses. Self-employed businesses and landlords are the final sectors to transition.
Find out more from HMRC’s ‘Overview of Making Tax Digital’ resource.
What can self-employed businesses and landlords do to get prepared?
Even though MTD has been delayed for self-employed businesses and landlords, it’s never too early to start learning about what changes you will have to make, to ensure you are well-prepared when the deadline begins to approach.
MTD is very different to the traditional system. Currently, landlords and self-employed businesses must submit an annual tax return to HMRC either through a paper form sent by post, or electronically via a Government Gateway account.
The MTD system will require taxpayers to record all transactions digitally and submit quarterly returns to HMRC using specific MTD-compatible software, which electronically links bookkeeping records into HMRC’s MTD computers.
You will have to purchase MTD software yourself, as it will not be provided by HMRC. Some of the most popular MTD-compatible software brands are Sage Accounting, Xero and QuickBooks.
Is anyone exempt from MTD?
In certain circumstances, some landlords and self-employed businesses may receive an exemption from MTD. This is because the use of a computer is not reasonable or practical. Reasons for this could be:
- Age, disability or remote location
- Objection to the use of computers on religious grounds
- Other good reasons why it is not practical
If you believe you should be exempt from MTD, you will need to apply to HMRC for exemption. Each application is considered on a case-by-case basis, and exemption is not guaranteed to be granted.
If you would like help with transitioning to MTD, or you have any questions, we can help! The team at AMR Bookkeeping Solutions can provide support in all areas of business bookkeeping. Call 01892 559480 or get in touch through our website.
