In a written statement, the Treasury has announced that Making Tax Digital for income tax self assessment (MTD for ITSA) will be delayed for two more years until April 2026.
In light of the challenging economic environment which self-employed individuals are currently facing, and understanding that the transition to MTD for ITSA represents a significant change to taxpayers in terms of how self-employment income is reported, the government has extended the period to prepare for MTD. The mandatory use of software is therefore being phased in from April 2026, rather than April 2024.
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 updates on 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 customers will be able to join voluntarily beforehand meaning they can eliminate common errors and save time managing their tax affairs.
The Treasury said that the government now intends to review the needs of smaller businesses in regard to MTD for ITSA. It said it will consider how the initiative can be shaped to meet their needs and, once the review is finalised, the government will outline plans for any further mandation of MTD for ITSA.
The Treasury also stated that they will not extend MTD for ITSA to general partnerships in 2025, saying that the government ‘remains committed to introducing MTD for ITSA for partnerships at a later date’.
If you have any concerns or queries relating to this matter, please contact Neal Groves or your usual Beavis Morgan partner.