What is MTD for ITSA?
MTD for Income Tax Self-Assessment (ITSA) is a fundamental change to tax reporting for individuals and will replace the Self-Assessment tax return with a series of quarterly submissions, an end of period statement and a final declaration. The submissions will require MTD compatible software, and the individual will need to keep digital records.
Sole traders and landlords affected by the changes can voluntarily sign up for MTD for ITSA before those dates and use the new digital tax recording and reporting methods.
When is starting?
The government had previously announced that this scheme would start in April 2024 for any individual with an income over £10,000.
However, to allow taxpayers, their agents, software providers and HMRC more time to prepare for these fundamental changes to ITSA, the Government has announced a phased introduction from April 2026 and an increase in the previous gross income threshold from £10,000 to £50,000 from April 2026 reducing to £30,000 from April 2027.
HMRC REMAINS COMMITTED TO MTD FOR ITSA
Jim Harra, Chief Executive and First Permanent Secretary, HMRC, said: “HMRC remains committed to the delivery of Making Tax Digital as a critical part of our strategy for digitalising and modernising the tax system, but we want to make sure we get this right and deliver it effectively. A phased approach to mandating MTD for Income Tax will allow us to work together with our partners to make sure that our self-employed and landlord customers can make the most of the opportunities this will bring.
