Making Tax Digital major rethink

Making Tax Digital for income tax (MTD ITSA) has been postponed again. It will not now be mandated for any taxpayer until April 2026. An announcement on 19 December 2022 set out a revised timetable, along with other changes. The logic is that this gives all parties longer to prepare in challenging economic conditions.

Self-employed businesses and landlords with qualifying annual income over £10,000 were expected to enter MTD ITSA in April 2024; with most partnerships entering in April 2025. This will not now happen. Landlords and businesses instead enter MTD ITSA, and a new points-based penalty regime, in stages, according to income. HMRC has reconsidered the income thresholds involved, which are now as follows:

• April 2026 entry for self-employed individuals and landlords with income over £50,000
• April 2027 entry for self-employed individuals and landlords with income over £30,000.

HMRC will review whether MTD ITSA can be designed to work appropriately for those under the £30,000 threshold. This is a first indication that such businesses may perhaps not be required to enter MTD ITSA in its current format. Partnerships are still expected to join ‘at a later date’ but no further detail has been given. We will continue to update you as information becomes available.