A recent statement by HMRC has announced the postponement of the implementation of the Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) changes until April 2026.
Making Tax Digital for Income Tax Self-Assessment was slated for instatement in April 2024, but it has emerged that the programme to digitise the UK tax system will be pushed back to 2026. Making Tax Digital for Income Tax Self-Assessment applies to the legislating the digitalisation of recording tax data and submission. Businesses will have two years to prepare and test the service voluntarily prior to its introduction.
The introduction of MTD ITSA would have led to over four million self-employed workers and small businesses to file tax returns multiple times a year. In preparation of the changes, we collaborated with fin-tech company, Coconut, to develop a digital accounting app focused on sole traders. Read more about the Coconut app and its benefits here.
The decision to postpone MTD for ITSA was revealed after HMRC updated its MTD for ITSA departmental page, and it is worth noting that the announcement relates to Making Tax Digital for Income Tax Self-Assessment only. Making Tax Digital for VAT has already been implemented and is demonstrating the benefits to businesses and the tax system of digital ways of working.
From April 2026, self-employed individuals with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on income and expenditure to HMRC through MTD-compatible software. We would be happy to recommend MTD-compatible software to those who need it. Additionally, those with an income of between £30,000 and £50,000 will need to do this from April 2027.
According to HMRC: “Mandation of MTD for ITSA will not be extended to general partnerships in 2025 as previously announced. The government remains committed to introducing MTD for ITSA to partnerships in line with its vision set out in the government’s tax administration strategy.”
For more information on what the postponement means for businesses, contact our team here, or call 01792 346272.