In mid-December, HMRC announced a delay to Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). It was an announcement that had been long rumoured.
As it stands, HMRC will require you to continue reporting your income in the same way you always have done until at least 2026.
This blog sets out to outline and explain those changes and to stress why moving to digital records remains so important for your portfolio and/or business.
What are the changes?
In case you missed the announcement:
- The mandatory MTD for ITSA filing requirement has been delayed from April 2024 to April 2026.
- The income reporting level has also increased and is set to be phased with phase one (income over £50,000) planned for April 2026 and phase two (income of £30,000 up to £50,000) planned for April 2027.
- Any requirement for landlords and sole traders earning less than £30,000 will be reviewed in due course.
- Partnerships will no longer be brought into MTD for ITSA as previously planned in 2025.
Why did HMRC make the changes?
The reason that HMRC has given for delaying MTD for ITSA is to help those involved – taxpayers, tax agents, software developers – to ‘maximise the benefits’. The delay will give HMRC more time to ensure the system is fully operational. MTD ITSA was, and is, a major legislative change that we and many other professionals have been working hard towards, so this delay will not have been taken lightly.
We’ve heard rumours that the policy and design of MTD requires ‘fundamental changes’ which leads us to believe that the thresholds above and the requirements as outlined previously (quarterly reporting, End of Period Statement, Final Declaration) may change again ahead of 2026.
We will, of course, keep you informed as any further changes are announced and will be flexing our own solutions accordingly.
Why you must still consider digital records
Talking of our solutions… the digitalisation of your records is paramount to better financial visibility, regardless of what is mandated by HMRC.
We are huge advocates of the benefits of keeping digital records and the change to the MTD timeline does not alter that. Why? Because keeping digital records:
- provides you with the ability to manage multiple financial admin tasks from one platform thanks to digital invoicing and receipt capture.
- enables us to provide you with your personal tax liabilities long before the January deadline so that you can plan accordingly.
- provides you the real-time financial data you need to have informed discussions (accessed anytime, anywhere).
- gives you visibility to help manage your financial health.
- will make your quarterly updates less time consuming as you are submitting less information at one time – information that has been automatically compiled using your digital records.
How can we help?
As advocates of digital accounting solutions, we are passionate about the early adoption of digital record keeping. This delay to the mandatory filing requirement provides landlords and sole traders with more time to get ahead of the game and to start reaping the benefits sooner rather than later.