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What did the Autumn Statement mean for MTD?

24 Nov 2023

Whether you’re an accountant in practice or an accountant in industry, Making Tax Digital will be on your radar. Given the Chancellor’s recent Autumn Budget, 20:20 Innovation are asking, what did the autumn statement mean for MTD?

The outcome of the Making Tax Digital Small Business Review was published as part of the Autumn Statement. The review focused on whether and how small businesses should be brought into MTD.

Read on for more information about the impact of the Autumn Statement and discover what it means for MTD. If you would like more information about joining why not book a free 30-minute demo with our team today.

Simplifying the Process of Making Tax Digital

MTD for ITSA is due to come into play from April 2026 (following several delays). Under this rule every three months you'll need to send HMRC a summary of your income and expenses.

It is expected that software will do most of the heavy lifting at this stage. The really good news comes with the announcement that no adjustments for allowances or reliefs will be due for the quarterly reports.

Scrapping the End of Period Statement

The End of Period Statement (EOPS) submission seemed daunting for accountants. Broadly, EOPS meant effectively making 5 or more (depending on the sources of income) submissions (the 4 quarters plus the EOPS).

Initially, it seemed that the four quarterly updates would have to include all the necessary accounting and tax adjustments and claims for any allowances or reliefs for your business or property income.

After all that, you'd make an EOPS for each source of business income, confirming everything's correct and complete for the year.

Accountant looks at making tax digital MTD

Then, there was one more step: a final declaration, which was thought to be similar to the current Income Tax Return. This is where you'd present your finalised income position across all sources.

The review found that many considered the EOPS requirement confusing, and a bit redundant. This was because it would duplicate a lot of the information in the final declaration.

As a result, the completion of an EOPS is no longer a requirement. The idea is that MTD-compatible software should cover most of what the EOPS was supposed to do.

Are there MTD Exemptions?

A few exemptions from MTD have also been announced, namely, foster carers, who it was deemed would not see the benefit of being mandated.

In addition, people who can't get a National Insurance (NI) Number will also be exempt from complying.

Without an NI Number, using HMRC's digital services would be tough. It is worth noting that this isn't necessarily an indefinite pass. If you're just temporarily stuck without a National Insurance Number, you'll need to comply with MTD once you manage to obtain one.

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Tax Agents

Another area in which the Government took advice from the stakeholder group was the accessibility of tax agents.

It can be common practice for businesses to have two agents. For example, a bookkeeper and an accountant - this is more likely to be the case with the increased reporting requirements.

At the moment, HMRC's online system only lets one agent handle a client’s affairs for each type of tax. But with MTD ramping up, this setup will not cut it for everyone. Some may want one agent to handle quarterly updates and another to take care of the year-end and final declarations. The current system doesn't support that.

The Government has announced that they are working on changing this so it’s possible to have multiple agents working on one client’s MTD requirements. This is in a bid to make MTD smoother and more flexible for everyone involved.

Looking at digital tax records

Does Making Tax Digital Impact Landlords?

Finally, the biggest affected sector in the next wave of MTD is the property sector, especially landlords.

The Autumn Statement announcement impacts those who jointly own letting properties. It means that when a property is rented out with someone else, the property owner usually has to deal with only their share of the income for tax purposes. This gets a bit more complicated if they're married or in a civil partnership.

MTD would be a headache for most jointly owned property landlords because every quarter, they would have to figure out their share of income and expenses and then swap all these transaction details with the other owner. That's a lot of extra work.

The government is now making this easier.

First off, landlords can now choose to skip submitting quarterly updates on expenses for those jointly owned properties. This means less paperwork throughout the year and the records will just be included in the final declaration.

Accountant using phone and laptop for making tax digital

Furthermore, detailed digital records for these jointly owned properties will not be required. This should make receiving client information much simpler.

It is great to see the government taking feedback on board and acting upon it to make the process much easier for those involved.

MTD currently applies to sole traders and landlords with income over £50,000 from April 2026 and those exceeding £30,000 from 2027.

The government will keep under review the decision on further mandating of businesses and landlords with income below £30,000.

If you would like more information about joining 20:20 Innovation, why not book a free 30-minute demo with our team today or call us on +44 (0) 121 314 2020.

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