Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requires businesses and landlords with qualifying income to maintain digital records and update HMRC each quarter using compatible software.

Originally scheduled for mandatory implementation in April 2024, the Making Tax Digital (MTD) timeline was updated in December 2022. The revised compliance schedule is now as follows:

For individuals, MTD for ITSA will be introduced in two phases:

• from April 2026, for those with qualifying income over £50,000
• from April 2027, for those with qualifying income over £30,000

The government remains committed to the future introduction of MTD for ITSA to partnerships.

All individuals with a gross annual self-employment or property income that meets the qualifying income threshold are required to comply with the MTD rules. However, you may choose to follow the MTD rules voluntarily, even if you are not legally obligated to do so.

Meanwhile, individuals with a gross annual self-employment or property income that does not meet the qualifying income threshold, as well as partnerships, trusts, estates, and trustees of registered pension schemes, are not currently required to comply with the MTD rules.

MTD will introduce several changes to how you manage your business and report your income. You will need to keep your records digitally and use compliant MTD software.

But that’s not all. You will be required to submit quarterly updates to HMRC, reporting your business or property income and expenses for the relevant period.

As part of the finalisation process, you will also need to adjust your income and expenses in the software to calculate the final taxable profit for the business’s accounting period. This may include submitting amended quarterly updates.

We are here to support you through the transition to MTD, ensuring you stay updated on new developments and legislation as they arise.