Government delays MTD for income tax and basis period reform
Following vocal representation from various professional bodies, the government has agreed to delay crucial reforms to the tax system. What’s the full story?
On 23 September 2021 the secondary legislation for implementing Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) was published. The new regulations confirm that MTD ITSA will be implemented for self-employed trading income and property income. However, the implementation date will now be 6 April 2024 rather than 2023. All sole trade businesses and landlords will come within MTD ITSA from that date. General partnerships will follow twelve months later, with other types of partnership in subsequent years yet to be confirmed. The new penalty system that was due to be introduced alongside MTD ITSA will also be pushed back to 2024.
Further welcome news came via a ministerial statement concerning basis period reform. The statement says that the reform will now not take place until April 2024 at the earliest, which would mean the transition year would be in 2023/24 not 2022/23. A statement on whether the reform will be dropped completely is expected at next month’s Budget - though we currently believe this is unlikely.
Related Topics
-
Who can't yet sign up for MTD IT?
Making Tax Digital for Income Tax (MTD IT) becomes mandatory from April 2026 for sole traders and landlords with qualifying income over £50,000. However, HMRC’s current guidance makes clear that not everyone can sign up yet. If you are preparing early, are you actually eligible?
-
Pay self-assessment tax
-
MONTHLY FOCUS - PROFIT EXTRACTION PLANNING AHEAD OF 5 APRIL 2026
The end of the 2025/26 tax year is fast approaching. In this Monthly Focus we look at ways to get money out of your company tax efficiently, and consider whether limited is still the way to go for your business.
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.