The new Financial Secretary to the Treasury, Lucy Frazer MP, has announced that part of HMRC’s flagship project Making Tax Digital will be delayed for one year, meaning that quarterly income tax reports will need to start being submitted to HMRC from April 2024 instead of 2023. This will affect self-employed people and landlords with an annual income over £10k.
In a written statement to parliament, Frazer outlined the rationale for the delay:
“The Government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the last year. In recognition of this and of stakeholder feedback, we will now be introducing MTD for ITSA a year later, in the tax year beginning in April 2024.”
“A later start for MTD for ITSA provides more time for those required to join to make the necessary preparations and for HMRC to deliver the most robust service possible, affording additional time for testing in the pilot.”
The announcement also suggests that the government will be proceeding with their previously suggested ‘simplification‘ of amending how self-employed profits are allocated to tax years:
“Many respondents said that the reform was a sensible simplification but asked for more time to implement the changes. In recognition of these concerns, these changes will not come into effect before April 2024, with a transition year not coming into effect earlier than 2023. The Government will respond to the consultation in due course providing the next steps.”
I can’t help thinking that this is the real reason for the delay, i.e. implications of a tax year starting on 6 April alongside requiring quarterly profits to be calculated evenly throughout the calendar year. Whatever the reason, the delay is positive providing it is used to ensure that these complexities are ironed out well in advance.