MAKING TAX DIGITAL

THE

Things

YOU NEED TO KNOW

Organisations are looking for a bit of certainty as they navigate the current financial climate. Goalposts being moved are not helping with business woes.

Fortunately, HMRC’s move to delay Making Tax Digital (MTD) for income tax until at least April 2026 has brought with it a clear sense of relief for many. Compulsory entry into the scheme has also been staggered rather than bringing everyone under the same rule simultaneously.

Many will have plans in place to digitise their systems, but these efforts haven’t been wasted. MTD will give businesses a more structured method of approaching their finances via real-time data. With this comes significant advantages, such as clarity around tax liabilities and what tax is owed quarterly rather than a hefty tax bill come year-end.

Sole traders, who may use their bank account as the only gauge of their finances, will benefit greatly. For landlords too there are clear advantages. Amidst changes to mortgage tax allowances and shifting tenancy regulations, landlords can have all the data they need to make informed decisions.

So, there are clear positives but what remains to be seen is who will be impacted and when.

Another issue not yet addressed is around year-end reporting. Businesses who don’t work to HMRC’s tax year will need to be accommodated, avoiding having a year-end in one period and then reporting on it in another. The government needs to utilise the delay to understand these real issues faced by businesses and work with accountants to iron out solutions before the deadline.

While these grey areas are clarified, Monahans is working hard to ensure our clients have the most up to date information. It is not just a case of ticking the MTD box, rather we’ve already identified numerous clients who will substantially benefit from digitising their systems. Businesses should use these two extra years to prepare for MTD rather than delay the inevitable.

If you need support with your MTD accounting, please get in touch today and we’d be more than happy to help: monahans.co.uk/contact-us.