Making Tax Digital (MTD) for Income Tax is being heralded as the biggest change to the way that taxes are filed for decades.
With it being such a significant change, it is little wonder that there are many different questions still surrounding the implementation that people need to settle before they can embrace the change with confidence.
The role played by maternity leave and other factors that may influence your income has now been clarified, so it is worth understanding how this may impact you.
Maternity leave may not necessarily exempt you from MTD preparations even if it is currently reducing your income to below £50,000.
This is due to the MTD obligations being calculated based on qualifying income during the 2024/2025 tax year.
This means that any sole trader, self-employed individual or landlord who earned above £50,000 in that time will be expected to adopt MTD this year, even if their income has diminished since then.
If you are currently on maternity leave or are about to take it, then it is worth considering how this will impact your income.
Some self-employed individuals or sole traders continue to do some work during maternity leave, while others pause entirely for the duration.
Either way, your MTD obligations are not impacted by maternity leave if you have plans to get back to the typical operation of the business.
If you are no longer going to be generating an income that will make you eligible for MTD, then you should let HMRC know so that they can liberate you from your obligations.
This will also be the case if your income falls below the threshold for three consecutive years.
However, a decline in income may still make you subject to MTD requirements as the threshold itself is dropping over the next few years, so it is worth checking whether you have fallen out of the scope of MTD entirely.
Getting ready for MTD might not seem like the highest priority when you are welcoming a new life into the world, but your obligations persist regardless.
You are still expected to set up your digital record-keeping so that you can submit quarterly filings alongside an annual statement, even if your income for this year will be nil.
The saving grace is that there are no penalties this year for missing deadlines, so if things do become complicated and you struggle to keep up, then you will not be punished.
We want to help you avoid that, so our team is on hand to support you no matter what life throws at you.
MTD is changing tax filings for thousands of people, so it is understandable that you would need help understanding your new obligations.
Speak to our team to find out what you need to do to get MTD ready.
