Five software packages that are compatible with Making Tax Digital (MTD) for income tax have been signed off by HMRC.

Products include one for individuals to submit digital records for income relating to self-employment and property.

MTD for VAT came into force on 1 April 2019 for businesses with annual taxable turnover above £85,000.

The next milestone will be MTD for income tax, which in theory could start in April 2020 but is almost certainly going to be April 2021 at the earliest.

With the Spring Budget on 11 March 2020, there is an outset chance that a rollout date for the start of MTD for income tax may be included.

MTD for income tax will apply to the self-employed, partnerships and trusts, and anyone who receives income from property.

An exemption will apply to those with an income below a certain threshold, possibly £10,000, from all sources of self-employment and property income.

An exemption may also apply to larger partnerships with a turnover exceeding £10 million.

Mark Farrar, chief executive at the Association for Accounting Technicians, said:

"Without the more pressing priorities of Brexit, HMRC would have been moving towards digital corporation tax by now.

"We should be well on our way to having an automated tax system by the end of the coming decade."

MTD for income tax will eventually replace tax returns being submitted through self-assessment.

The deadline to submit tax returns relating to 2018/19 is at midnight on 31 January 2020.

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