Making Tax Digital for Income Tax Self-Assessment delayed until 2026

On 19 December 2022, the government announced Making Tax Digital for Income Tax Self-Assessment (‘MTD for ITSA’) requirements for the self-employed and landlords were being delayed. The announcement followed significant lobbying and concerns raised by professional bodies and practitioners.

The government announced that MTD for ITSA will now be mandated from April‌‌‌ 2026, and will not be implemented from April 2024 as previously announced. The following changes were also announced about the scope of the scheme and affected taxpayers:

• 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 about their income and expenditure to HMRC through MTD-compatible software
• those with an income of between £30,000 and up to £50,000 will need to do this from April‌‌‌ ‌‌2027
• most taxpayers within the scope of MTD for ITSA will be able to sign up voluntarily before they are mandated to do so
• MTD for ITSA will not be extended to general partnerships in 2025 but should be introduced at a later date, to be confirmed.

The UK Government has said it will review the needs of smaller businesses, and particularly those under the £30,000 threshold before taking further decisions. This review look in detail at how the MTD for ITSA service can be shaped to meet their needs and the best way to fulfill their Income Tax obligations. Once that review is complete – and in consultation with businesses, taxpayers, agents, and others – the UK Government will lay out plans for any further mandating of MTD for ITSA.

You can see the full announcement made by the government on the GOV.UK website.

Action accountants can take following the government’s announcement

Accountants will wish to contact their self-employed and landlord clients to let them know the government has announced a two year delay to the implementation date of MTD for ITSA. While the delay will be welcome, there is still scope to encourage affected clients to use appropriate software to ensure their finances are fully up to date.

You can see our previous blog about how to prepare for MTD for ITSA by following this link, though you should note the new implementation dates and scope of the scheme highlighted above which supersede our earlier blog.

How Initor Global can help your Practice

At Initor Global we can support your Practice by providing bookkeeping services, the preparation of annual accounts, company tax returns, self-assessment tax returns and payroll. To discuss your outsourced accounting needs in more detail, you can contact us on hello@initor-global.co.uk or visit our website at initor-global.co.uk.