January: here to stay?

If you’ve been following our blogs and newsletters, you will have noticed we’ve mentioned Making Tax Digital (MTD) once or twice. The reason being that MTD represents a significant change to the way self assessments will be submitted/managed. Thus it’s not something that can or should be ignored.

As a reminder, MTD is the new self assessment system which was originally due to launch in April 2023. In simple terms, the new system will require self employed individuals to deliver their figures via quarterly self assessments (note: this refers to filings as opposed to actual payments). The main reason for the increased reporting frequency is that HMRC believes it will help them recover £32bn in underpaid tax each year.

In April 2021 it was announced that the launch of MTD would be postponed 12 months to April 2024. This week we have been told of a further delay and that the launch date is going to be put back by a further two years to April 2026.

Whilst this may feel like good news (given that quarterly reporting is going to be a greater burden both in terms of resource and costs), it is still a question of when, not if. What’s more, it’s worth adding that MTD is not optional. Quarterly reporting will be mandatory (subject to you being in scope – it applies to individuals and landlords with an income of £50k or more. Those with an income between £30 & 50k will be rolled in from April 2027).

So, with the launch put back to April 2026, does that mean we can all forget about it for now? And given the repeated delays, is there a chance it might not even happen at all?

Whilst ignorance is bliss, in our opinion it would be prudent to start taking some steps to ensure as smooth a transition as possible when it finally does happen. Here are three things you can do to get started:

• If you haven’t already, make sure you are utilising accounting software such as Xero in your business.
• Keep digital records, and keep on top of your paperwork – no more carrier bags of receipts!
• Don’t leave things until the last minute, hoping they will take care of themselves. You need to be on top of this.

If you follow these three suggestions, not only will you be in a good place when MTD goes live, but it will help you in the meantime too. Having up to date financials ensures you’re in a much better position to understand how your business is doing and what to watch out for. It’s the key to good decisions. And then come April 2026, whilst other are losing their heads, you’ll be in an enviable position, firmly focused on your business.

If you would like to find out more about MTD, Xero or how to understand the key numbers in your business, please get in touch. We’d love to hear from you.