On 19 December 2022 the Financial Secretary to the Treasury issued a statement about the proposed implementation of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA).
Making Tax Digital (MTD) involves those affected keeping digital records and submitting quarterly updates to HMRC via compatible software.
Having been pushed back several times MTD for ITSA was scheduled to start in April 2024 for businesses, self-employed individuals and landlords with income over £10,000.
The government has now announced that the mandation of MTD for ITSA will start from April 2026, and only then with businesses, self-employed individuals and landlords with income over £50,000 mandated to join first.
Those with income over £30,000 will be mandated from April 2027.
There will now be a review of smaller businesses to decide if and when they will be required to join MTD for ITSA.
MTD for ITSA for partnerships, which was due to start in April 2025, has also been postponed until ‘a later date’.
The new penalty regime, which was also due to come into effect in April 2024 for those affected by MTD for ITSA, has been delayed and will happen whenever affected businesses, self-employed individuals or landlords are mandated for MTD.
The government expects that taxpayers within the scope of MTD for ITSA will be able to sign-up voluntarily before they are mandated to do so.
The government has cited the challenging economic environment as their reason for the delay.
The main points for you to remember are:
- MTD for ITSA starts in April 2026 for those with income from self-employment or rental over £50,000.
- MTD for ITSA starts in April 2027 for those with income from self-employment or rental over £30,000.
- Those with income from self-employment or rental under £30,000 will not be mandated for MTD before April 2028, if at all.
- Partnerships will not need to join MTD until April 2026 at the very earliest.
- MTD for corporation tax will not start until April 2026 at the very earliest.
Although MTD for ITSA has been further delayed we are still committed to advocating the use of software for many of our self-employed and rental clients. That is because of the time-savings that using software affords and the ability to keep more timely and accurate accounting records.
If you would like to discuss using accounting software speak to your main contact at Friend & Grant.
If you would like to find out more, please email Darren Hughes or call 01634 731390
If you would like to find out more about some of our services that might help you please take a look at our related pages:
Expert Cloud Accounting
Property investors and developers
Take a look at our other blog on the topic of digital software
What software should I use for MTD?
The content in this blog is correct as at 20th December 2022 See terms and conditions.