MTD where are we now?

Published: 20/06/2024 By Hannah Duncan

Making Tax Digital (MTD) has been around for years but MTD for Income Tax Self-Assessment (ITSA) is still yet to take off. The government are proposing to introduce it officially on 6th April 2026 with the idea still being that it will modernise our current tax system.

However, there have been a number of announced changes which we summarise below:
  • The self-employed and landlords with turnover above £50,000 will be required to join MTD for ITSA from 6th April 2026 for the tax period 2026-27
  • Both trade and rental income combined will be classed as the total MTD ITSA turnover  
  • Overseas rental income is also included in this total turnover, however separate quarterly sets of accounts will need to be prepared for UK rent and overseas rent
  • The remaining self-employed and landlords with income over £30,000 will be required to join from 6th April 2027 for the tax period 2027-2028
  • Turnover figures for tax year 2026/27 will be taken from 2024/25 income and 2027/28 figures will be based on those from 2025/26
  • For those who earn under £30,000 the Government will be reviewing this, but it is unlikely they will need to enrol in MTD for ITSA
  • It is yet to be decided when general partnerships will join MTD for ITSA

The difference from current practice will be that for MTD for ITSA reporting is done quarterly rather than annually, as well the utilisation of digital records in order that they can be linked as submissions. Following each quarter taxpayers will have 1 month and 2 days to submit their new quarterly report to HMRC. The quarterly reports therefore fall on 7th August, 7th November, 7th February and 7th May.  Adjustments are not needed each quarter however these can be done on a voluntary basis but all that is required is to submit an income and expenses report quarterly. Any mistakes to previous quarters can be amended in the next quarter report, a revised return does not need to be redone for previous quarters.
 
Regardless of your account period everyone will have the same quarters matched to the tax year.
 
To replace the normal self-assessment yearly tax return a final declaration will be submitted. This will confirm the income and gains for the financial year and is to be submitted by 31st January,  most MTD software packages allow for both the quarterly and final declaration submissions. However, these will need to be checked by your accountant prior to submitting to HMRC.
 
We suggest if you are yet to keep your records digitally you get on board with this as soon as possible! However, if you need assistance in getting MTD for ITSA ready get in touch to see how we can help you. Call 020 8661 7878 or email bsg@turpinba.co.uk or fill out our contact form

Our short video explains MTD: