Last call to meet first Making Tax Digital for Income Tax reporting deadline
Last call to meet first Making Tax Digital for Income Tax reporting deadline
Sole traders and landlords earning more than £50,000 from their self-employment and property only have until 7 August to make their first quarterly report to HMRC under the new Making Tax Digital (MTD) for Income Tax regime, BDO has warned.
In total, 864,000 sole traders and landlords are in scope for the first wave of MTD for Income Tax.
The programme will then be extended to those earning more than £30,000 from April 2027, and to those earning more than £20,000 from April 2028.
MTD for Income Tax is now a legal requirement and those taxpayers in scope should check they are signed up, that their software is compatible and their MTD summary is submitted on time.
No penalties will be issued for late quarterly updates during the first year of MTD for Income Tax. However, from the second year onwards, points-based penalties will apply where taxpayers miss a deadline.
Taxpayers will receive one penalty point for each missed quarterly deadline. Once a taxpayer accumulates 4 points, a £200 fixed penalty will apply.
Commenting ahead of the deadline, Elsa Littlewood, a private client services tax partner at BDO said:
“Getting ready for MTD for Income Tax has been a bit of a headache for accounting firms – and taxpayers who are unrepresented may also find the process challenging at first. However, there are some good explanatory materials on the gov.uk website to help.
“The first reporting deadline comes at a rather inconvenient time when many people will be trying to enjoy their summer holiday.
“It will be interesting to see what proportion of the 864,000 taxpayers in scope actually meet the deadline, particularly if no penalties will apply in the first year.
“This could be key in determining whether HMRC is able to stick to its plan to extend the programme in 2027 and 2028.
“It’s important to remember that these are reporting deadlines for basic income and expenses only and they don’t trigger tax payments. However, this week HMRC closed a consultation on timely payments in income tax self assessment.
“This envisages bringing forward tax payment deadlines from April 2029 onwards for those taxpayers within the self assessment regime.
“While the rules are not yet set in stone, we could conceivably see payment demands being brought forward to coincide with quarterly MTD reporting deadlines in the future – or even an entirely separate set of payment deadlines, adding yet more complexity.”
ENDS
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BDO LLP operates in 19 offices across the UK and Ireland, employing 8,500 people. It has revenues of £1.1bn.
It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing (CR&O) services predominantly to the entrepreneurial, ambitious and growing mid-sized businesses that are driving growth in the UK and Ireland economies.
BDO LLP is the UK and Ireland member firm of the BDO Global network.
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