HMRC have released draft legislation in respect of the upcoming changes to how self-employed individuals and landlords will need to report their income under Making Tax Digital (MTD) for Income Tax from 6 April 2024.
From April 2024, MTD for Income Tax requires those who have income over £10,000 from self-employment or rental income in a tax year to report their income and expenses to HMRC on a quarterly basis before then also filing a year end return. These new submissions will replace the current self-assessment return.
The draft legislation states that the quarterly returns for those with income between £10,000 and the VAT registration threshold (currently £85,000) will, in additional to the income, only need to include a single entry to cover all expenses, whereas for those with income higher than the VAT registration threshold more detailed expenses will be needed.
Under MTD for Income Tax, taxpayers will also be required to maintain digital records whether this be via spreadsheets or a software provider. Although MTD is still over a year away it is something that taxpayers need to start considering to ensure a smooth transition especially if paper records are still being used.
The legislation is still in draft and we will continue to monitor any developments. If you have any queries or wish to discuss any of the above then please contact us.