HMRC has published more details on how Making Tax Digital for Income Tax (MTD for IT) will work for buy-to-let landlords and sole traders with qualifying income over £10,000.

The new income tax framework for MTD for IT will be mandatory from 6 April 2024. HMRC is now asking for users to sign up for the test phase.

The new system will replace self assessment tax returns for anyone who qualifies for MTD for IT as they will have to submit all non-qualifying income through the Personal Tax Account (PTA) system instead.

Anyone who qualifies will have to make quarterly submissions, and the new deadline for end of year statements will be 31 January after the end of each tax year.

HMRC will use data from self assessment tax returns to calculate qualifying income in the first instance and will contact all affected taxpayers directly to inform them that they fall under the mandatory MTD for IT rules.

HMRC states:

‘Your qualifying income is the combined income that you get in a tax year from self-employment and property income sources. We assess this before you deduct expenses (that is, your gross income or turnover).

‘All of your qualifying income must be reported through MTD compatible software.

‘All other sources of income reported through self assessment, such as income from employment, dividends or savings, do not count towards your qualifying income. You will need to report income from these sources using either your MTD compatible software (if it has the functionality) or HMRC online services account.’

Internet links: Using MTD for IT Check if you can sign up for MTD for IT

The Treasury Committee has urged the government to provide assurance that it is not ‘flying blind’ into a potential Emergency Budget this September.

In a letter sent to Chancellor Nadhim Zahawi, Mel Stride, Chair of the Treasury Committee, asked whether the Treasury is working with the Office for Budget Responsibility (OBR) on a forecast to be published with any potential Emergency Budget that may be announced.

The Treasury Committee has outlined to the Chancellor that an OBR forecast would need to include all changes to government policy and economic and fiscal data up to when the new Prime Minister takes office.

The government usually gives the OBR ten weeks’ notice of a fiscal event, such as a Budget, to allow officials to provide an independent forecast of the economy and the UK’s fiscal position.

In the letter, Mel Stride said:

‘As a committee, we expect the Treasury to be supporting and enabling the OBR to publish an independent forecast at the time of any significant fiscal event, especially where, unlike other recent fiscal interventions, this might include significant permanent tax cuts.

‘Whether such an event is actually called a Budget or not is immaterial. The reassurance of independent forecasting is vital in these economically turbulent times. To bring in significant tax cuts without a forecast would be ill advised. It is effectively ‘flying blind’.’

Internet link: Parliament website

More than £20 billion could be added to the UK economy in the future from the number of additional businesses created during the pandemic, according to research carried out by the Confederation of British Industry (CBI).

Around 800,000 companies were registered in the first year of the pandemic, a 22% increase compared with the previous year. Only 13% of these start-ups cited regulation as a challenge when starting their business.

However, access to finance was a key concern for many burgeoning business leaders, with 55% highlighting this post-2020, compared with 42% pre-Covid.

The research also found that businesses born during the pandemic are 20% more likely to embrace sustainability than firms established prior to 2020.

Tony Danker, Director General of the CBI, said:

‘Pandemic-born businesses – led by ambitious, resilient entrepreneurs – have innovated in so many ways, and at such speed, giving me great sense of optimism. It’s crucial we give these leaders the support they need to grow and succeed.

‘Rising energy prices, supply chain challenges, an uncertain economic outlook and cost-of-living crisis mean we’ve some testing months, and possibly years, ahead. For start-ups which count their experience in months, not years, that environment is even tougher.

‘That said, even if the cost of doing business is rising, the cost of starting a business shouldn’t. The UK needs the ideas and ingenuity of entrepreneurs to help us grow.’

Internet link: CBI website

The government has introduced legislation to Parliament, which it says will enhance the competitiveness of the UK financial services sector and unlock tens of billions of pounds of investment.

The Financial Services and Markets Bill repeals hundreds of pieces of EU retained law to deliver a ‘comprehensive model of regulation for the UK’.

The government says this will establish a ‘coherent, agile and internationally respected approach to financial services regulation that works in the interests of British people and businesses’.

The Bill will implement the government’s vision for the sector that is ‘open, green, technologically advanced and globally competitive – while maintaining high levels of consumer protection’.

Commenting on the legislation, David Postings, Chief Executive of banking industry group UK Finance, said:

‘A successful financial services sector is critical for achieving economic growth and benefits the whole country – it is one of our most important industries, delivering jobs, investment and growth across every region.

‘To ensure the sector continues to be successful, alongside maintaining the pace of reform, there needs to be a keen focus on international competitiveness from the next government.’

Internet link: HM Treasury press release

Insurer Zurich UK has stated that there has been a significant increase in the number of fraudulent claims as a result of the cost-of-living crisis.

Zurich found that between 1 January and 31 May 2022, the number of fraudulent property claims rose by 25% compared to the same period in 2021. It also stated that in the last five months, it has prevented fraud amounting to £4.2 million, which equates to more than £40,000 a day.

TVs, mobile phones and jewellery were some of the most common items fraudsters claimed to have had stolen or to have lost.

Scott Clayton, Head of Claims Fraud at Zurich UK, said:

‘Sadly, many more people are facing hardships as a result of the cost-of-living crisis, which is contributing to an increase in fraudulent claims. Since the start of the year, we’ve seen a significant rise in bogus property claims as households and businesses come under increased financial strain.

‘While exaggerating or faking a claim might seem like a chance worth taking, the consequences can be severe, with fraudsters facing criminal prosecution and potentially even a prison sentence.’

Internet link: Zurich website