MAKING TAX DIGITAL FOR INCOME TAX SELF ASSESSMENT
I want to draw your attention to the new scheme the government are bringing in from 6th April 2023 the government plans to roll out MTD ITSA for businesses and landlords with an annual turnover of more than £10,000. Turnover is the amount of income you receive not your profit.
At the moment self-employed, partnerships and rental properties have to submit there tax returns annually. The new scheme means that you will need to submit quarterly electronic reports. You will have to submit separate quarterly reports for each trade and property business you own. In addition to this you have to submit an end of period report and a year-end finalisations report.
REPORTING REQUIREMENTS UNDER MTD FOR ITSA
Under MTD for ITSA, clients will need to provide the following reports:
Quarterly reports. These should include all relevant income and expenses. The rules are the same for quarterly updates for property businesses.
End-of-period statements (EOPS). This is a final statement of total turnover for the end of each accounting period. This final statement will replace the current annual Self Assessment return, but it must be completed in addition to the four quarterly reports, making a total of five reports per tax year.
Finalisation statements. This is also known as the crystallisation statement. It brings together all the information included in the MTD reports, as well as other taxable income, to calculate overall tax liability for the year.
These reports must be submitted for each individual trading or property business that the taxpayer operates.
START DATES FOR MTD FOR ITSA
Announced in July 2020, the starting dates for MTD for ITSA are as follows:
Existing trading income: first accounting period starting on or after 6 April 2023.
Existing property income: 6 April 2023.
New trading business: start of accounting period in year three.
New property business: 6 April following the start date.
HMRC will contact you when you need to enroll
HMRC has made clear it will charge penalties after the grace period for late submissions.