HMRC updates MTD ITSA guidance
HMRC has clarified which taxpayers can sign up for Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) voluntarily in its updated guidance. Who can join early and is it worthwhile?
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Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
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Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
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Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
From 6 April 2024, individuals with self-employment or rental income over £10,000 will be required to register for MTD ITSA. This means that all records will need to be kept digitally, quarterly updates must be submitted to HMRC, and a final declaration must be made at the end of the year. Individuals within MTD ITSA will no longer be required to submit annual self-assessment returns. The due date for income tax payments remains 31 January following the end of the tax year. To help HMRC test and develop the service and to get used to quarterly reporting, you can sign up to use MTD voluntarily now. HMRC has clarified that you can start using the service if you’re:
- a UK resident;
- registered for self-assessment with no outstanding tax returns or tax payments; and
- a sole trader with income from one business, or a landlord who rents out UK property.
You cannot sign up yet if you need to report:
- income from any other sources; or
- an income tax charge, e.g. the High Income Child Benefit Charge or annual allowance pension tax charges.
If you do join, you must still submit the tax return for the previous tax year. For further information, see the guidance here.
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