What is MTD for ITSA?
MTD for ITSA is designed to simplify the process of filing your self-assessment tax return, making it digital and replacing the existing paper-based system. This means that instead of having to prepare and complete a self-assessment tax return each year separately, you’ll be able to upload digital records straight into an online HMRC portal from your record-keeping software.
Due to economic challenges that self-employed individuals and property owners in the last year, HMRC pushed the start date of mandatory MTD for Income Tax Self Assessment to April 2026.
What Does This Mean for You?
This delay means that you don’t need to worry about MTD for ITSA just yet. That said, it’s still important to understand what it is and how it works so that when the time comes, you’ll be able to effectively transition to the new system.
To get ready for MTD for ITSA, it’s a good idea to start ensuring your records are kept digitally and consider using accounting software to keep track of your transactions. This will help you save time when it comes to submitting your tax return each year.
You should also take the time to familiarise yourself with the MTD for ITSA software and understand how it works. To help you compare the software you can look into our blog further here HMRC has published plenty of resources and guidance material to help you with this, so be sure to take advantage of them.
What changes come into effect with MTD for ITSA?
HMRC made an announcement on 19/12/2022 regarding the said delay on MTD for ITSA and the announcement came with certain changes;
- If you earn more than 50K as a self-employed or landlord, you’re required to keep digital records and submit quarterly updates. You may be eligible for a deferral of up to 18 months if your turnover is below 85,000 GBP/year. Penalties will now only apply after the first year of filing under MTD for ITSA.
- If your income is between 30K and 50K, you’re able to voluntarily opt-in to MTD for ITSA, however, this will be delayed until April 2027. Overall, the delayed rollout of MTD for ITSA gives you plenty of time to prepare for the changes and get your digital records in order. Although it can seem like a lot of hard work to prepare for the changes, it’ll help save you time and money in the long run.
- For partnerships, the start date for MTD for ITSAs is delayed until April 2025.
- If you are a small business, earning less than 30K, the future of MTD for ITSA isn't really in the clear for you as the government is still processing the possible obstructions of MTD for ITSA use for those earning under £30,000.
Speak to Your Accountant about MTD for ITSA NOW!
The MTD for the ITSA deadline has been pushed back to April 2026 which gives businesses and landlords more time to get familiar with the software and make changes to their accounting processes. However, it is important to start familiarising yourself with the new software now so that you can be prepared for when the initiative does come into effect. If you have any questions about how MTD for ITSA will impact your business or rental properties, speak to your accountant or financial advisor. They will be able to help you understand what steps you need to take to comply with the new regulations.
Frequently Asked Questions:
Has MTD been delayed?
MTD had to be pushed back, with the revised start date only taking effect in April 2026. This came after a statement made by HMRC on 19 December 2022.
What is the deadline for MTD?
The new deadline is now April 2026 for MTD for ITSA
Are partnerships affected by MTD for ITSA?
Starting from April 2025, all general partnerships will be mandated to join MTD ITSA. Meanwhile, limited liability partnerships and other partnership types boasting a corporate or non-human partner aren't required just yet - however, the date for when they'll have to jump on board is still TBD.
What happens if I miss the MTD deadline?
Taxpayers are given one chance to follow the MTD rules and make their filing on time. If they fail, a default is registered – triggering an additional 12-month period of surcharge payments which vary depending on how much VAT was due in their last return! Don't let your finances take this double hit; stay vigilant when it comes to meeting deadlines and obligations.