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The Pushback of MTD for ITSA from April 2024 to April 2026

Jessica Maddams profile picture

Self-employed individuals and landlords have been given an additional two years' grace by the government in terms of going fully digital with their tax, writes Jess Maddams, Accounting Technician. All the same, it would be good to get ahead of the game and switch to MTD-compliant software.

Following HMRC's decision to delay the implementation of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), many businesses are probably breathing a sigh of relief. If you are self employed or a landlord with annual business income over £50,000, it defers the moment at which quarterly MTD submissions will become compulsory.

All VAT registered businesses will already be compliant with MTD (as of April 2022), so if you're in this position, then no doubt you are already keeping digital records. However, you will be required to submit a separate, quarterly MTD for ITSA report as well as the VAT return.

If you are not VAT registered, then this may all be new to you and seem a bit daunting. So let us go over the basics of what will be required:

  • The self-employed and landlords with income over £50,000 will be required to comply with the new rules from April 2026, or from April 2027 if business income is over £30,000.
  • Under new MTD rules, businesses must keep digital records and use third-party software to submit their tax returns to HM Revenue and Customs (HMRC). They will need to keep records of their income and expenditure digitally and send a quarterly summary of income and expenses, plus an end-of-year report, using MTD compatible software.
  • The software chosen must be MTD enabled and be capable of receiving information from HMRC digitally.

It may sound like too big a change in the way you do things if you are currently keeping manual records, but the reality is that many of our clients who have already changed to digital records are finding it much less stressful and time-consuming. Once you get started, it will become second nature. This is why moving to digital software now would be advantageous because, by the time it becomes a requirement, you will already be proficient and ready to start submitting those quarterly returns to HMRC.

Each quarterly return will have a deadline for submission which falls on the 5th of the month after the month following the quarter end. For example, the submission for the quarter ending 30th June will have a deadline of 5th August. This short amount of time does mean that you will need to keep up to date on your bookkeeping to ensure you submit in a timely manner.

There are plenty of options for software, from very simple apps which will just record income and expenditure, to software that can deal with a business that has multiple bank accounts and income streams with numerous transactions being processed. The only requirement is that the software you choose is compatible with MTD.

If you are unsure which to choose or need further advice about how to prepare, then the staff here at Page Kirk would be happy to assist. Or you may feel like it's just too much and choose to outsource the work to someone else. In which case, we can help with that too.

Simply email enquiries@pagekirk.co.uk or call 0115 955 5500.