Further delays to the roll out of Making Tax Digital for income tax self-assessment (MTD for ITSA) have been announced by the Government.
Originally meant to be here in April 2023, the date had been pushed back to April 2024, until yesterday when the Treasury announced a phased roll out starting in 2026. This will be welcome news to the millions of small businesses affected who are struggling with rising inflation and an economic crisis.
What is MTD for ITSA?
MTD for ITSA means taxpayers must keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. For many, this will mean significant investment in time and expense purchasing new accounting software.
When does MTD for ITSA come in?
The roll out starts in April 2026 with self-employed individuals and landlords with an income of more than £50,000. This is followed by those with an income of between £30,000 and £50,000 in April 2027. For those with incomes below £30,000, no date has been set and the Government has announced a review to consider how MTD should apply. Although it is expected that Partnerships will have to comply with MTD for ITSA at some point, no date has yet been announced.
Can I sign up for MTD for ITSA voluntarily?
For many people, digital ways of working are the norm and some may feel that moving to MTD sooner rather than later makes sense for them. You can sign up voluntarily before your mandated date, however, we would always advise speaking to your accountant or tax adviser before taking any action.
What are the digital options for MTD for ITSA?
There are a few software solutions on the market but again, speak to your accountant or tax adviser as they may have a solution. If you do your tax returns yourself then there is a list of HMRC approved software https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax#software-available-now , this page also contains a list of the software that is currently under development and should be ready by go live.