In December 2022, the plans for Making Tax Digital for Income Tax Self-Assessment changed again, as the Government announced that instead, MTD ITSA would be introduced in mandatory phases from 6 April 2026, as opposed to 2024.

What are the phases?

Self-employed individuals and landlords with turnovers of more than £50,000 will be the first to join, which HM Revenue & Customs (HMRC) have estimated will apply to over 700,000 people.

The next group will be those with a turnover over £30,000, who will be required to join in April 2027.

There are ongoing discussions around MTD ITSA being introduced for those who turnover under £30,000 as around 2.6 million taxpayers are thought to be in this group.

What is MTD for ITSA?

MTD for ITSA is a part of the broader Making Tax Digital initiative introduced by the HMRC.

It requires individuals, including self-employed individuals and landlords, to maintain digital records of their income and expenses, and use compatible software to submit their tax information to HMRC.

This replaces the traditional method of filing Self-Assessment tax returns on paper or through the HMRC website.

Are there any exemptions?

You can apply for an exemption if it is not practical to use software for your records or submit your data in this way.

This could be because of your location, age or other justifiable reason. HMRC will then review this reason and an alternative will be found if it is accepted.

It is important to still be preparing for this change, despite the delays as it will eventually impact you and your business from 2026.

For more information on MTD for ITSA, get in touch now.