MTD ITSA pilot to become more accessible in July
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will begin to become compulsory from 2024. However, HMRC is encouraging taxpayers to sign up early via the pilot scheme. Now it has announced that from July 2022, the pilot will be expanded, allowing more individuals to join. Who will be eligible?
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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?
MTD ITSA will become compulsory for taxpayers with self-employment or property income from April 2024. Certain categories of taxpayer have been able to sign up early to have as much time as possible to familiarise themselves with the requirements, such as keeping digital records and sending quarterly updates. Taxpayers using the pilot still have to submit a tax return at the moment. However, until now the eligibility criteria have been criticised for being very narrow. Coupled with this, the number of software providers that are currently compliant is relatively small. As a result, the uptake in joining the pilot has been very small. HMRC has now announced that taxpayers with the following reportable items will be able to join from July 2022:
- self-employment(s)
- UK property
- Gift Aid
- Pay As You Earn income, including pensions
- UK interest
- UK dividends.
It appears that those with income from other sources, partnerships and with certain charges collected via self-assessment, e.g. the High Income Child Benefit charge, will continue to be excluded for the time being. Anyone wishing to obtain further information should contact their software provider, or HMRC by email at mailboxmakingtaxdigital@hmrc.gov.uk.
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