Commentary

A4.174 Scope of MTD for income tax

Administration and compliance

A4.174 Scope of MTD for income tax

A4.174 Scope of MTD for income tax

Subject to the income exemptions, the requirements of MTD for income tax apply to all persons carrying on a trade, profession, vocation or property business unless they are excluded persons or are carrying on excluded activities or they fall within the digital exclusions. Each of these exceptions is explained below.

The income exemptions

The income exemption is that the amount of the person's qualifying income is not more than £10,0001. For this purpose, a person's qualifying income for a tax year is the sum of the amounts of income, before any deductions (ie it is turnover and not profit), which, for each business carried on by the person in that tax year, are included in the person's self-assessment tax return for that tax year. The amount of qualifying income is judged by reference to the most recent tax year for which the filing deadline fell before the start of the tax year in question. When deciding whether MTD applies for 2024/25, for example, the preceding filing deadline is generally 31 January 2024 which is the deadline for the 2022/23 return. So one has to apply the £10,000 test to the qualifying income for 2022/23. However, a person who would otherwise be within the income exemption for a tax year is not within the exemption if MTD did apply to that person for the previous tax year. If a person's qualifying income for a tax year is in respect of a period of other than

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial