It looks unlikely that the government will heed recommendations for moving the end of the tax year to a calendar month-end date, instead adding options to quarterly reporting that require careful transition planning.
How many taxpayers pretend 31 March and 5 April are the same? Will this matter when Making Tax Digital income tax self assessment starts in 2024?
Last year, ICAEW’s Tax Faculty suggested 5 April was an unhelpful date on which to end the tax year. It recommended aligning the tax year with a calendar month end ahead of the start of Making Tax Digital income tax self assessment (MTD ITSA). The government has yet to respond to the Office of Tax Simplification’s exploration of the subject, but a change in time for MTD ITSA seems to have been ruled out.
However, the MTD ITSA regulations allow an election for calendar, rather than tax year, quarters for quarterly updates. Basis period reform and late accounting date rules for property businesses are expected to allow taxpayers to effectively move the first five days in April back a tax year, for both property and trading income.
This may have consequences for those taxpayers using the cash basis. Careful planning of the transition and choice of 31 March or 5 April accounting date will be important.
Join Caroline Miskin and Anita Monteith for ICAEW’s MTD ITSA webinar at noon (GMT) on Tuesday 30 November. They will explain the rules as they are now known based on the MTD ITSA regulations which were laid in September 2021.
Booking link: MTD for ITSA – Back to basics and myth busting
ICAEW Know-How from the Tax Faculty
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