Making Tax Digital for many freelancers delayed until April 2024

Making Tax Digital for non-VAT registered sole traders with over £10,000 in income has been delayed by 12 months.

Announced by the new financial secretary to the Treasury Lucy Frazer, the delay means such freelancers will now not need a digital tax account until April 2024.

The etching out of the April 2023 launch for MTD for Income Tax Self-Assessment (ITSA) is in “recognition” of the impact covid-19 has had on the self-employed, Ms Frazer said.

'Stakeholder feebdack'

She also said the decision to give non-VAT traders an extra year before being required to have a digital account, and update it with HMRC quarterly, followed “stakeholder feedback.”

And indeed yesterday, it was almost impossible to find an adviser, group or expert due to be affected by the digital system who did not endorse shelving it, even if they like its principles.

The Federation of Small Businesses, and The Association of Independent Professionals and the Self-Employed, each said the MTD delay would grant freelancers “breathing space.”


And accountants like Graham Jenner, who count self-employed freelancers among their clients, summed up best why that space is all but vital, even possibly a lifeline.

“The delay, as businesses try to recover from the knockbacks of Covid-19 lockdowns and restrictions is to be welcomed,” began the boss of Jenner & Co in a statement to FreelanceUK.

“There so many sole traders out there with income greater than £10,000, who don’t currently use an MTD-compliant cloud based accounting system, and their focus needs to be on getting their business back on track – not worrying about an enforced administrative change purely for compliance reasons.

“A possible change to cloud based accounting software is just not something that many businesses want to spend time on, or can afford to spend time on, as their focus has to be on rebuilding their business after the impacts of Covid, and for some, Brexit.”


Due to the pandemic, but also because MTD ITSA will increase their admin burden, it is “unsurprising” to hear freelancers let out a sigh of relief at the delay, says Joanne Harris, another chartered accountant.

The head of technical compliance and payroll at SJD Accountancy, Ms Harris told FreelanceUK: “The changes will require businesses to keep electronic records and make submissions to HMRC every quarter, rather than annually, and use HMRC-approved software.

“Many [in the freelance community]…are still recovering from the impact of the pandemic [but it’s important that they] understand that this is just a delay, and that the government remains committed to MTD.”

'End of the road still on the MTD map'

Carolyn Walsh, a former tax inspector, is pleased that the government is shelving MTD for businesses and landlords rather than scrapping it.

“Fortunately, it’s still the case that the end of the road is still on the map for people who send in a folder full of business receipts to their accountant once a year,” she said.

“Because the government are only delaying it by a year and under MTD ITSA, every sales invoice and every purchase invoice must be reported via accounting software to HMRC in the relevant period.”

Joking that she is ‘bias towards MTD’ because she hates a receipt-mountain landing on her desk, Ms Walsh, boss at CWC Accounting Solutions, also said freelancers with pro-active accountants probably won’t notice much of a difference.

 “Everyone affected will see their accountancy costs rising to accommodate this change to a digital system, but even before the delay was announced, many good accountants had already started switching their clients to accounting software that manages MTD. So I’d say most won’t be worried.”

'Creative freelancers can rejoice'

Quite the opposite of ‘worried,’ self-employed people in sectors getting back to their feet as coronavirus restrictions lift should be almost celebrating the MTD hiatus.

“Copywriters, graphic designers, and other creative industry freelancers will be delighted with this prudent decision,” says Guy Sterling, a tax partner with Moore Kingston Smith. “Perhaps the lobbying worked, or HMRC hasn’t got the software quite ready. A general hurrah in any event.”

In the official announcement of the MTD delay, the government reminded that the “next step” for HMRC is to extend MTD for VAT to all VAT registered businesses from April 2022, although some 280,000 businesses under the VAT threshold (£85,000) were said to have already joined MTD of their own accord, in pursuit of the system’s benefits.


28th September 2021

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