Autumn Statement 2023 has confirmed the start dates for Making Tax Digital for Income Tax (MTD ITSA).
In outline, MTD ITSA involves keeping digital records and providing quarterly updates of income and expenditure to HMRC through MTD-compatible software. There is also an end of year finalisation process, replacing the self assessment tax return.
As previously announced, from 6 April 2026, self-employed individuals and landlords with qualifying annual income over £50,000 will be mandated to join MTD. From 6 April 2027, it will apply to those with qualifying income over £30,000. The position for the self-employed and landlords with turnover of £30,000 or below is being kept under review. Although HMRC intends partnerships to use MTD ITSA in due course, there is no timetable for rollout to these businesses. Neither is there progress in the plan to bring in MTD for corporation tax.
The Autumn Statement also announced some changes to the details. Though widely welcomed, many commentators feel there‘s still a long way to go to make the regime effective. The changes include:
There is, understandably, a feeling that MTD ITSA may never happen. The programme has faced numerous setbacks and is now running eight years late. A report by the Public Accounts Committee published in November 2023, noted ‘poor delivery . . . spiralling costs . . . significant design issues still to resolve’. It concluded, ‘we are sceptical its new timetable is achievable’.
Clearly HMRC faces a considerable challenge. But it’s equally clear that MTD ITSA is still on the agenda for 2026 and beyond, and the government has now consulted on the draft legislation. We would be pleased to discuss the implications for you and your business, so you are prepared for any changes to come.