MTD delay offers vital ‘breathing space’ for self-employed

Government’s one year delay to MTD provides ‘much-needed breathing space’ for millions of self-employed people

Many self-employed people are welcoming the news that Making Tax Digital (MTD) for income tax self-assessment (ITSA) has been delayed by one year.

HMRC said it recognised the challenges faced by many as the UK emerges from the pandemic and therefore decided to delay the digitalisation of submitting taxes from April 2023 to April 2024.

This deferral was announced to give businesses more time to prepare and allow “HMRC to deliver a robust service, with additional time for customer testing in the pilot.”

Over 4 million would have been forced to implement changes in 2023

MTD ITSA would have forced over four million self-employed workers and landlords with incomes of more than £10,000 a year to keep their accounting records digitally and file quarterly updates to the taxman, instead of the single annual update. 

It’s the first phase of a wider government initiative aimed at moving towards a more “modern, digital tax service” that should enable self-employed people to be more accurate in their self-assessment returns.

Lucy Frazer, the recently appointed financial secretary to the Treasury, said: “The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.

“But we recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so.

“We remain firmly committed to Making Tax Digital and building a tax system fit for the 21st century.”

Call for government to increase MTD threshold

Industry bodies have welcomed the news of the delay saying it will offer “much-needed breathing space” to many self-employed people who have been hit hard by the pandemic.

Andy Chamberlain, director of policy at self-employed trade body, IPSE, said: “It is very welcome that the government has decided to delay the roll-out of Making Tax Digital for Income Tax. 

“This will provide much-needed breathing space before another painful hit to the self-employed. After the financial impact of the pandemic, many freelancers simply are not ready to make the shift to Making Tax Digital.

“Although we can see the benefits of digital record-keeping, we continue to have reservations about certain aspects of the change. The shift to quarterly reporting will be a serious and heavy additional admin burden for many freelancers.”

IPSE is calling on the government to raise the threshold for MTD above £10,000 so it does not apply to the smallest businesses.


  • Alfonse says:

    Imagine you run a hobby business turning over 10K, you maybe make a profit margin of 1k. Suddenly you’re faced with quarterly returns on top of all the other paperwork. Can you feel the veins throbbing in your temple already?
    Late filing penalties, missed deadlines, not worth the agro!
    Most will come to the same conclusion, go off grid or pack it in.
    Fuck you hector I’m off to the black economy!

  • Andrew Harrison says:

    At present I file my wife’s self employed accounts online (not VAT registered) – so it arrives at HMRC as digital information. So what’s the benefit to HMRC of MTD? More frequent returns – maybe. More accurate returns – no, there will still be me collating the manual information and typing it in. It may be into a complicated front end rather than an Excel spreadsheet but it is still transcribed from the manual source records.
    The real benefit of MTD is that someone can put it on their CV as an improvement in working practices.

    Dear HMRC,
    If you have the spare time for MTD then please read the Pandora papers instead.

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