Autumn Statement 2023 has confirmed the start dates for Making Tax Digital for Income Tax (MTD ITSA).
In outline, MTD ITSA involves keeping digital records and providing quarterly updates of income and expenditure to HMRC through MTD-compatible software. There is also an end of year finalisation process, replacing the self assessment tax return.
Where are we now?
As previously announced, from 6 April 2026, self-employed individuals and landlords with qualifying annual income over £50,000 will be mandated to join MTD. From 6 April 2027, it will apply to those with qualifying income over £30,000. The position for the self-employed and landlords with turnover of £30,000 or below is being kept under review. Although HMRC intends partnerships to use MTD ITSA in due course, there is no timetable for rollout to these businesses. Neither is there progress in the plan to bring in MTD for corporation tax.
The Autumn Statement also announced some changes to the details. Though widely welcomed, many commentators feel there‘s still a long way to go to make the regime effective. The changes include:
- Quarterly updates are now intended to be a cumulative total of income and expenses for the tax year to date. This workaround should help where previous figures need amendment.
- The requirement for an End of Period statement is removed. This should help streamline the end of year process.
- Some administrative easements for landlords with jointly owned property.
- Some groups are exempt, notably foster carers, and those not entitled to a National Insurance number.
- HMRC hopes to be able to deal with multiple agents, for example where quarterly updates are filed by a commercial book-keeper, but end of year submissions are made by a different adviser.
Will it, won’t it?
There is, understandably, a feeling that MTD ITSA may never happen. The programme has faced numerous setbacks and is now running eight years late. A report by the Public Accounts Committee published in November 2023, noted ‘poor delivery . . . spiralling costs . . . significant design issues still to resolve’. It concluded, ‘we are sceptical its new timetable is achievable’.
Clearly HMRC faces a considerable challenge. But it’s equally clear that MTD ITSA is still on the agenda for 2026 and beyond, and the government has now consulted on the draft legislation. We would be pleased to discuss the implications for you and your business, so you are prepared for any changes to come.