Latest news with #MTD
Daily Mirror
3 days ago
- Business
- Daily Mirror
Tax warning issued to freelancers ahead of shake-up next year
MoneyMagpie Editor and financial expert Vicky Parry warns self-employed workers and freelancers about the pitfalls of ignoring Making Tax Digital changes Making Tax Digital (MTD) has been slow to roll out, but it's nearing the end. And most freelancers and self-employed people have no idea what that means for them. This guide helps you understand what you need to know to avoid huge fines from HMRC. What is Making Tax Digital for income tax? HMRC reporting systems are outdated and unwieldy. Making Tax Digital is supposed to cut through the archaic system to help companies and freelancers manage their taxes more easily and accurately. The scheme has already rolled out for companies and sole traders registered for VAT. Making Tax Digital for Income Tax is the next stage in a years-long roll out of the new system. Rather than annual reporting with a deadline nine months after the end of the previous tax year, which is the current Self Assessment system, people will be required to submit quarterly assessments and the final, fifth, full report. The system is supposed to help freelancers and sole traders budget their taxes better. However, it does also add administrative burden to companies and freelance workers – and there is a requirement to use third-party software to submit, too. Who does it impact? By April 2028, all self-employed traders who earn over £20,000 a year will be part of MTD Income Tax. This will be rolled out in stages. For those earning above £50,000 a year, they will need to be registered for and using MTD for April 2026 – the next tax year from the one we're currently in. That means there are only ten months to get everything set up. Those earning £30,000 or above will need to comply by April 2027, and those earning £20,000 will be part of the scheme by April 2028. Landlords: You need to register too If you earn above the threshold amounts for any roll-out year of MTF for Income Tax from property rental income, you will need to register. If your property income is through the Rent a Room scheme, you won't need to register (unless your combined self-employed income also takes you over the threshold). You can ensure the tax-free portion of Rent a Room is managed on your final end of year full tax return. MTD for income tax exemptions There are some situations where you could be exempt from MTD for Income Tax. The first is if you know you will only use simplified expenses . Other exemptions include where HMRC cannot provide a digital service due to remote location, or a person cannot use a digital service due to age, disability, or location (i.e., it is too remote). You also do not need to register if you are under an insolvency procedure or your business is solely run by people of a religious order where electronic communication does not comply with religious beliefs. You may also withdraw from MTD for Income Tax if your business has received under the threshold income for three consecutive years, or your business is in a winding down procedure. Check the details of these and further possible exemptions on the Making Tax Digital Government pages . Self assessment and payments on account You will still need to complete an annual Self Assessment as well as file your quarterly reports. The Self Assessment is more detailed and will enable you to adjust for non-business income and other details. You're not penalised for adjustments between quarterly reports and your final Self Assessment. Payments on Account will still apply, too. This is where, if your tax bill is over £1000 for the year, you will need to pay the full tax bill plus 50% by January 31st, and the remaining 50% in July. PoA is supposed to estimate a regular annual income, so if you have an exceptional year – such as receiving an unusually large contract – you can apply to reduce these payments. However, if you apply to reduce the payment and then do manage to earn similar in the following tax year, interest can be applied on the difference in payments. Penalty points for late filing Late filing will still come with penalties, as with the usual Self Assessment process. However, in the trial years if you signed up to test the system early filing penalties will not apply. There is a new points-based penalty system for MTD Income Tax. You will not pay a fine for the first late filing, but cumulative errors will apply over ongoing tax years. Points will be applied for each late filing of quarterly and final reports, with a maximum fine of £200 for 4 points. The points will only reset when all filings are met to current dates. Points will expire after two years if you do not meet the threshold of 4 points. Penalties for late payments will also be changing under the new system. If you pay within 15 days of the due date, there is no fine. Within 16-30 days inclusive, the fine is 3% of the tax outstanding on the 15th day, and over 30 days the fine is 3% of the tax on the 15th day, plus 3% of the tax on the 30th day, and an extra 10% per annum charge until the payment is made. Interest will also be accrued daily. Standard fines for not maintaining accurate records, or for broken links in compatible software, will result in fines up to £3000. Choosing a third party software One of the rules of MTD for Income Tax is the use of third-party approved software. You can check which software is approved by HMRC here . You will need this software for your records even if you have an accountant filing on your behalf. While you can still keep spreadsheet records for your business, your filing must be done via one of these software platforms. Many business bank accounts now offer free access to integrated approved software, which could reduce the financial burden of your quarterly returns as well as make them faster as the software will have real-time information about your income and expenses. Sign up to free HMRC webinars While not widely advertised, HMRC does have some resources for freelancers and self-employed workers on their website. This includes a section about Making Tax Digital for Income Tax, including a recorded webinar or the ability to register for the next live webinar. It is strongly advised that freelancers, sole traders, and self-employed workers register for email updates from HMRC about Making Tax Digital, in case changes are implemented as the scheme rolls out through the trial phase. Some of the brands and websites we mention may be, or may have been, a partner of However, we only ever mention brands we believe in and trust, so it never influences who we prioritise and link to
Yahoo
4 days ago
- Business
- Yahoo
ICAEW highlights five key changes for income tax self-assessment
The Institute of Chartered Accountants in England and Wales (ICAEW) has outlined five key changes for taxpayers completing their 2024/25 Income Tax Self-Assessment (ITSA) return. Around 780,000 taxpayers filed their 2023/24 return on the final day, 31 January 2025, with nearly 33,000 doing so in the last hour, the chartered accountancy body said. The ICAEW advised taxpayers to understand these changes to avoid last-minute difficulties. The first change highlighted was to capital gains tax (CGT) rates. For disposals of assets (excluding residential property and carried interest) after 30 October 2024, rates have risen from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. The ITSA return may not automatically apply these new CGT rates, so HMRC has provided a calculator to adjust figures manually. The CGT annual exempt amount has also dropped from £6,000 to £3,000, affecting more taxpayers, while the CGT rate on residential property disposals for higher-rate taxpayers has decreased from 28% to 24%. The second change highlighted was the inclusion of new boxes in the 2024/25 tax return for reporting profits and losses from crypto asset disposals, previously recorded under other property, assets, and gains. HMRC has increased its focus on crypto tax compliance, launching a campaign in August 2024 targeting taxpayers suspected of underpaying tax. The third change highlighted was that, from 2024/25, the cash basis—calculating profits based on cash received and paid—becomes the default for most sole traders and partners, replacing the accruals basis. Taxpayers wishing to continue using the accruals basis must now elect to do so, likely leading to wider use of the cash basis, said ICAEW. The fourth change highlighted was that the 2024/25 tax year is the first to calculate trading profits on a tax year basis, following a transitional period in 2023/24. For businesses with transitional profits in 2023/24, 20% of these profits will typically be taxed in 2024/25, though taxpayers can elect to accelerate taxation. Any remaining transitional profits will be taxed in the year the business ceases. The fifth change highlighted was that, from 6 April 2026, sole traders and landlords with combined gross sales and rents over £50,000 must comply with Making Tax Digital (MTD) for income tax, requiring digital records and quarterly updates to HMRC. The MTD threshold will lower to £30,000 in April 2027 and £20,000 in April 2028, bringing more taxpayers into scope. The chartered accountancy body urged taxpayers to plan ahead to ensure compliance with these updated ITSA requirements. ICAEW technical manager for tax Stephen Relf said: 'Many taxpayers are keen to get their tax affairs in order early, and thoughts may now be turning to the completion of the 2024/25 tax return. To help, we've identified some of the areas where tax rates, rules or allowances, or the tax return itself, have changed for 2024/25. And we've provided tips for looking ahead to 2025/26. 'Don't forget that HMRC provides a range of tools and guidance to help with completing the tax return. Download HMRC's app to get your national insurance number or to check your entitlement to the state pension. 'Also, taxpayers can set up a budget payment plan with HMRC, allowing them to make weekly or monthly direct debit payments toward their next income tax self assessment bill.' "ICAEW highlights five key changes for income tax self-assessment" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Business News Wales
6 days ago
- Business
- Business News Wales
ACCA Calls on UK Government to Move with Caution on E-Invoicing
Adopting electronic invoicing should be voluntary for both UK businesses and the public sector, according to leading global accountancy body ACCA (the Association of Chartered Certified Accountants). Responding to a HMRC consultation – Electronic invoicing: promoting e-invoicing across UK businesses and the public sector – ACCA is clear that while the implementation of e-invoicing could bring a number of key benefits for business, such a move must be demand led and must not divert focus away from existing priorities such as Making Tax Digital (MTD). Glenn Collins, head of policy, technical and strategic engagement at ACCA, said: 'With so much investment already having been made by software providers, taxpayers and all key stakeholders in Making Tax Digital (MTD), we would be concerned that the implementation of e-invoicing could potentially dilute already finite resources and lead to delays.' Lloyd Powell, head of ACCA Cymru/Wales, said: 'We would encourage a cautious approach when considering the capacity HMRC would have to implement new developments such as e-invoicing while HMRC reforms and areas such as MTD are at the early stages of phased implementation. In other words: concentrate on making MTD a success.' In its response ACCA suggests that any e-invoicing system should adopt a decentralised 'four-corner model' giving independence and flexibility and would not require users to be locked into a central platform. Joe Fitzsimons, regional lead, policy & insights, ACCA, said: 'A voluntary system of e-invoicing designed to encourage business adoption to realise key business benefits is the most productive approach. Cost benefit analysis will remain crucial as well as considering how e-invoicing can best work for business in practice. 'We also call on the Government to look at existing standards in countries which already use e-invoicing and take a phased approach to ensure capacity and capability can be built and crucially lessons learned.'
Yahoo
23-05-2025
- Business
- Yahoo
1 Unpopular Stock that Deserves a Second Chance and 2 to Be Wary Of
When Wall Street turns bearish on a stock, it's worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as M&A advisory. Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company's long-term prospects. That said, here is one stock poised to prove Wall Street wrong and two where the skepticism is well-placed. Consensus Price Target: $5.33 (-2.3% implied return) Started in 1998 as a platform to broadcast press conferences, ON24's (NYSE:ONTF) software helps organizations organize online webinars and other virtual events and convert prospects into customers. Why Do We Pass on ONTF? Offerings couldn't generate interest over the last year as its billings have averaged 3.3% declines Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment Extended payback periods on sales investments suggest the company's platform isn't resonating enough to drive efficient sales conversions ON24's stock price of $5.46 implies a valuation ratio of 1.7x forward price-to-sales. To fully understand why you should be careful with ONTF, check out our full research report (it's free). Consensus Price Target: $1,245 (9.6% implied return) With roots dating back to the precision balance innovations of Swiss engineer Erhard Mettler, Mettler-Toledo (NYSE:MTD) manufactures precision weighing instruments, analytical equipment, and product inspection systems used in laboratories, industrial settings, and food retail. Why Are We Cautious About MTD? Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth Anticipated sales growth of 3.4% for the next year implies demand will be shaky Static adjusted operating margin over the last two years shows it couldn't become more efficient At $1,136 per share, Mettler-Toledo trades at 26.1x forward P/E. Dive into our free research report to see why there are better opportunities than MTD. Consensus Price Target: $1,054 (3.4% implied return) Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ:COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities. Why Is COST a Top Pick? Locations open for at least a year are seeing increased demand as same-store sales have averaged 4.4% growth over the past two years Enormous revenue base of $264.1 billion compensates for its low gross margin and provides significant leverage in supplier negotiations ROIC punches in at 33.5%, illustrating management's expertise in identifying profitable investments Costco is trading at $1,020 per share, or 53.5x forward P/E. Is now a good time to buy? See for yourself in our full research report, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
Daily Mirror
22-05-2025
- Business
- Daily Mirror
HMRC confirms exact date huge change to income tax will start and what it means
From April next year, taxpayers earning over £50,000 from self-employment or property income will need to comply with new Making Tax Digital (MTD) for Income Tax rules A major tax change will be introduced next year, affecting thousands of Brits. HMRC has confirmed that the next phase of the rollout for Making Tax Digital (MTD) will go ahead on April 6, 2026. From this date, taxpayers earning over £50,000 from self-employment or property income will need to comply with new MTD for Income Tax rules. This is a new system for recording and reporting income and expenses, and all businesses' records will need to be kept digitally, and you will need to file quarterly updates on your earnings to the tax office. The move is expected to affect approximately 780,000 people in its first wave. The next wave will be introduced from April 2027 for those earning between £30,000 and £50,000, with another 970,000 people affected. A further expansion to those earning £20,000 will be introduced from April 2028 under the current plans. According to HMRC, the change is designed to improve accuracy, reduce errors, and save time. They believe the digital transition will help taxpayers stay on top of their obligations while offering a clearer picture of their tax position year-round. HMRC is currently encouraging early adopters to join the Making Tax Digital testing programme, which the tax office says will give people extra time to familiarise themselves with the new system and access dedicated support. Making Tax Digital has already been rolled out for VAT and has reportedly helped over two million businesses reduce errors and increase efficiency. A 2021 report found that 69% of businesses saw at least one benefit, with 67% reporting fewer record-keeping mistakes. Last month, James Murray MP, Exchequer Secretary to the Treasury, said: "MTD for Income Tax is an essential part of our plan to transform the UK's tax system into one that supports economic growth. By modernising how people manage their tax, we're helping businesses work more efficiently and productively while ensuring everyone pays their fair share. 'This is a crucial step in this government's decade of national renewal and our Plan for Change, as we clear away barriers that hold back growth.' Join Money Saving Club's specialist topics For all you savvy savers and bargain hunters out there, there's a golden opportunity to stretch your pounds further. The Money Saving Club newsletter, a favourite among thousands who thrive on catching the best deals, is stepping up its game. Simply follow the link and select one or more of the following topics to get all the latest deals and advice on: Travel; Property; Pets, family and home; Personal finance; Shopping and discounts; Utilities. Craig Ogilvie, HMRC's Director of Making Tax Digital, said: "MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax. "By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year.'
