The Government announced on Monday 19 December 2022, that MTD ITSA would be delayed until April 2026.
The Government has realised that the transition to MTD ITSA would be contributing additional pressures to self employed individuals and landlords, during an already uncertain financial future.
What is MTD ITSA
If you haven’t already heard about MTD ITSA (Making Tax Digital Income Tax Self Assessment), then a brief outline is the mandatory use of software for reporting income and expenses to HMRC on a quarterly basis for those who are self employed.
Following a phased introduction from April 2026, self employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly returns of their income and expenditure to HMRC through MTD-compatible software.
Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most self employed individuals will be able to join voluntarily.
After filing the quarterly returns, the self employed individual will receive an estimated tax calculation based on the information provided to help them budget for their tax.
At the end of the year, they can add any non-business information and finalise their tax affairs using MTD-compatible software. This will replace the need for a Self Assessment Tax Return.
HMRC’s verdict
Financial Secretary to the Treasury, Victoria Atkins, had the following to say:
”It is right to take the time to work together to maximise the benefits of Making Tax Digital for small businesses by implementing the change gradually. It is important to ensure this works for everyone: taxpayers, tax agents, software developers, as well as HMRC.”
”Smaller businesses in particular should be able to experience the benefits of increased digitalisation of Income Tax in a way which meets their needs. That is why we are also today announcing a review to establish the best way to achieve this.”
How we can help
We will keep you updated, where possible, with any newly released information regarding MTD ITSA.
If you’d like to discuss your finances and our services we can provide, call us on 01228 904904 or pop us a message at mail@seavorchartered.co.uk.
