HMRC has delayed its switchover to a digital format for income tax self-assessment returns by a year, pushing the start date back to 2024.
The pause has come as a result of the challenges associated with the pandemic and their impact on UK businesses and their representatives, according to HMRC.
The new Making Tax Digital (MTD) system for sole traders was due to come into force in the tax year starting in April 2023 but it now won’t happen until 6 April 2024.
For general partnerships, the switchover will now be in 2025 and an announcement has yet to be made on how other types of partnership will be affected.
There will also be a delay to basis period reform, with that change not being introduced until 2024 at the earliest.
This reform applies to the way tax on profits is computed for businesses and will mean that the calculation will be conducted on a tax-year basis only, regardless of the accounting year of the business.
The government had intended to introduce this new measure in 2023, but it now looks likely that 2023-24 will be the transition year.
Businesses can expect further guidance on this in the autumn Budget.
To learn more about the switch to digital, contact ADS Accountants here.