Making Tax Digital for income tax pilot extended

HMRC has announced the expansion of its Making Tax Digital (MTD) income tax pilot in order to accept quarterly updates from residential landlords with simple tax affairs.

While this is another step in the right direction, the list of software developers with Income Tax MTD-compliant software remains low (four at the time of publication).

The low availability of MTD-compatible Income Tax products is due to Mel Stride’s Ministerial Statement from July 2017, when he reversed the initial HMRC policy by mandating VAT-MTD ahead of income tax.

Since the announcement, most software companies have refocused resources to ensure their delivery of MTD-compliant VAT products well before next April’s deadline, as their top priority.

The MTD Income Tax pilot is open to the self-employed and residential landlords (or their agents) with simple tax affairs, who wish to opt out of the current self-assessment regime.

To join the pilot they must be willing to keep digital records of their business transactions and commit to sending Income Tax updates to HMRC. This must be done on a minimum of a quarterly basis using MTD-compliant software, instead of filing a self-assessment return.

At this stage, those with income from furnished holiday lets are not included.

Brian Palmer is the tax policy adviser for AAT.

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