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What are the MTD tax return changes from 2023/24?

What are the MTD tax return changes from 2023/24?

Danielle Griffin

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Change of accounting year end

In preparation for the introduction of Making Tax Digital for Income Tax Self-Assessment, the basis period rules for unincorporated businesses are being abolished. In its place, unincorporated businesses will be assessed on the profits actually earned in the tax year.

The new rules take effect from 2024/25, with 2023/24 being a transitional year.

This will affect you if you run an unincorporated business (normally, if you are self-employed) and you currently prepare your accounts to a date other than one between 31 March and 5 April inclusive. This change could create additional tax liabilities in the tax year that this realignment takes place. HMRC have agreed that these additional liabilities can be spread over the course of five years.

The transition to quarterly tax returns

Individuals with significant income are presently required to file one tax return a year.

From April 2024, HMRC’s Making Tax Digital program is being expanded to include self-employed individuals and landlords with business or rental income in excess of £10,000. This is described as MTD for ITSA (Income Tax Self-Assessment)

From April 2025, all other individuals subject to self-assessment will be drawn into the MTD for ITSA net.
  • MTD affected taxpayers will need to upload data to HMRC’s servers on a quarterly basis. This will increase the reporting requirement to four separate filing events during each tax year.
  • In order to upload data, taxpayers will need to keep their records in a digital format that has been programmed to synchronise with HMRC’s server, e.g. Quickbooks or Xero
We would encourage all taxpayers who have not yet considered these changes to contact us as soon as possible. Although 2024 may seem to be some time away there is much to do to ensure you stay MTD compliant.

For further information please use our MTD Hub or contact us.