HMRC are planning to introduce MTD for income tax from 6th April 2023 for unincorporated businesses. In the initial proposals your business would have had to start following the rules from the beginning of the accounting period starting on or after 6th of April 2023. HMRC have now amended their proposal to include any business accounting period starting from 1st April 2023. As a lot of unincorporated businesses end their accounting period on 31st March, they will now need to start a year early than previously proposed.
You will need to start following the rules if you are a UK resident and a sole trader with income from one business only or a landlord who rents out UK property (or both).
If you need to report income from any other sources you will not need to follow the rules.
To follow the rules for Making Tax Digital for Income Tax, you’ll need to:
- keep digital business records
- get compatible software
- send business income and expenses updates quarterly
- finalise your business income
- submit a final declaration instead of a Self Assessment tax return