HMRC’s new digital processes for individuals

MTD for income tax. HMRC is looking for more volunteers to use its Making Tax Digital for Income Tax (MTDfIT) pilot scheme. The full scheme will become mandatory from April 2023 for individuals who are self-employed or have a property rental business with annual income of more than £10,000. If you want to get ahead of the game by complying with the new software and other requirements, joining the pilot seems like a good plan.

MTD for self-assessment. If you complete annual self-assessment tax returns MTD will affect you even if MTDfIt doesn’t. As part of the process HMRC is making “multi factor authentication” (also known as two-step verification or 2SV) a requirement for all businesses and organizations using the Government Gateway to access its online services. Since 15 June 2021 you can only access your business tax business tax if you’ve set up 2SV.

Tip. If you haven’t logged in recently we recommend you do so now, and set up 2SV by following the on-screen instructions. It only takes a minute or two.

HMRC wants individuals who are self-employed or have a property rental business to trail its Making Tax Digital for Income Tax service before it becomes mandatory. HMRC has changed the login process for its digital services for all business users; it now requires two-step verification.

Tax-free summer breaks for your kids

Summer holidays. HMRC is reminding parents who have setup Tax-Free Childcare (TFC) accounts that they aren’t only for regular childcare costs. You can, for example, also use them to pay for after-school or summer childcare costs, such as accredited holiday clubs, childminders or sports activities.

Tip. As an employer TFC can be good news for you too. It can help prevent you from being short staffed in school breaks if employees are able to use TFC to help pay for care for their children during work hours.

TFC terms reminder. TFC accounts are for children aged up to eleven, or 17 if disabled. For every £8 you pay in the government adds £2 up to a maximum of £500 every three months, or £1,000 if your child is disabled.

You can use money from your Tax-Free Childcare account to pay for your childcare costs. This includes summer camps and other supervised school holiday activities.