Why this tax rule delay could put a handbrake on Xero’s...

Why this tax rule delay could put a handbrake on Xero’s growth

olanda RedrupReporterUpdated Jan 10, 2023 – 5.17pm, first published at 3.30pmXero could be forced to rely more on its home markets of Australia and New Zealand for subscriber growth in the next few years, following a UK legislative change that is tipped to put a handbrake on growth in the region.Since it was announced in 2015, Xero has benefited from the UK’s Making Tax Digital (MTD) initiative, which included various measures such as mandating digital methods for value added tax (VAT), starting in 2019.Xero chairman David Thodey, incoming CEO Sukhinder Singh Cassidy and outgoing leader Steve Vamos. Under the scheme, more businesses were forced to take up digital accounting software, such as Xero, to meet their obligations.The latest phase of the rollout – MTD for income tax self-assessment – had been slated to come into effect in April 2024, but this has now been pushed back until 2026 (for those generating upwards of £50,000 ($88,000)).It is bad news for Xero, which admitted that its 14 per cent growth in UK subscribers in July-December had been lower than expected because of a slower-than-anticipated shift in small businesses taking up digital accounting solutions in the final phases of the MTD initiative.