MTD ITSA (Making Tax Digital for Income Tax Self Assessment) is a government initiative in the UK aimed at modernising the tax system by requiring individuals, self-employed people, and landlords with income over a certain threshold to keep digital records and submit tax information more regularly to HMRC via compatible software.
Here’s a breakdown of the key details:
Who Will It Affect?
MTD ITSA will primarily affect individuals who are:
- Self-employed with income over £10,000 per year.
- Landlords with income from property over £10,000 per year.
- Partnerships (where each partner has income above £10,000).
In essence, it affects taxpayers who are required to submit Self Assessment tax returns and have income from business, property, or both above the threshold.
What Will It Require?
- Digital record-keeping: Individuals will need to keep digital records of their income and expenses using approved software.
- Quarterly updates: Instead of filing an annual tax return, taxpayers will need to submit quarterly updates of their income and expenses.
- End-of-year final declaration: After the four quarterly updates, a final year-end submission will be required to complete the tax return and reconcile any adjustments.
When Will It Be Introduced?
- April 2026: MTD ITSA will become mandatory for individuals with income over £50,000.
- April 2027: The scheme will be extended to individuals with income over £30,000, including smaller businesses and landlords.
Why is MTD ITSA Being Introduced?
The aim is to streamline the tax process, reduce errors, improve efficiency, and ensure that taxes are paid on time. It will replace traditional paper-based systems with digital solutions, allowing HMRC to process and collect tax more efficiently.
Impact and Preparation
Taxpayers affected will need to adopt compatible software for record-keeping and quarterly updates. This may require investment in training or new technology for businesses or landlords not already using digital tools.
Need Help?
If you need to file Self Assessment Tax Returns for Making Tax Digital, we recommend starting to look at your record keeping and preparing for the introduction of Making Tax Digital.
Our Accountants in Derby and Ripley are able to assist with any queries. Get in touch with one of our Accountancy experts on 01332 981920, 01773 424009 or Info@ascentant.co.uk
