Amid the current financial climate , uncertainty is the major issue for many organisations ; supply chain issues , will the Government provide sufficient support against the energy crisis , will interest rates rise or fall ? Meanwhile , the Government moving goalposts only adds to business woes .
Fortunately , recent changes made to Making Tax Digital ( MTD ) for income tax strike a more positive chord . Delaying MTD ’ s implementation until at least April 2026 has eased an air of panic for many businesses who weren ’ t ready for the changes . HMRC deciding to stagger compulsory entry into the scheme also makes sense , rather than maintaining the original strategy of everyone
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having to conform simultaneously , which would have been impractical .
For the organisations that are ahead of the game and have already put plans in place to digitise their systems , your efforts haven ’ t been wasted . MTD will give businesses a much more uniform and structured method of approaching their finances via real-time data . A steadier stream of information and knowledge around tax liabilities will be significant advantages , allowing for clarity on what tax is owed quarterly rather than businesses facing a hefty and unexpected tax bill at the end of the year . Sole traders , who may use their bank account as the only gauge of their financial standing , will benefit greatly .
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So , there are clear positives , but HMRC decisions such as this tend to provoke more questions than answers . With the proposed staggered implementation , it remains to be seen who will be impacted and when .
Another issue not yet addressed is around basis periods because it is as yet unclear how HMRC will accommodate businesses who don ’ t work to the UK tax year as their year-end . Those that have a year-end in one period but have to report on it in another may face scenarios where they have to pay tax on more than 12 months ’ worth of income .
It ’ s these real business issues that the government needs to understand in the time between now and the new
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deadline . Meanwhile , the delay has given businesses some breathing space but that ’ s not an excuse to sit back . MTD will ultimately benefit all businesses , through comprehensive insights into cash flow and better understanding of tax liabilities , and businesses should use these two extra years to prepare rather than delay the inevitable . Monahans is working hard to ensure our clients have the most up to date information on how they may be impacted . Monahans is working hard to ensure that we are ahead of the curve on all new MTD developments . If you need support with your MTD accounting , please get in touch today and we ’ d be more than happy to help : www . monahans . co . uk / contact-us . |