Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) has been delayed


Self-employed individuals and landlords will have more time to prepare for MTD following a government announcement on 19 December 2022.

HMRC recognises the current challenging economic environment and the transition to MTD represents a significant change to taxpayers and HMRC. The government is therefore giving a longer period to prepare for MTD. The mandatory use of software is being phased in from April 2026, rather than April 2024.

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 on their income and expenditure to HMRC through MTD compatible software. Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most customers will be able to do this from April 2027.

The government has also announced a review into the needs of smaller businesses, and particularly those under the £30,000 income threshold. The review will consider how MTD for ITSA can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations. It will also inform the approach for any further roll out of MTD for ITSA after April 2027.

The mandation of MTD for ITSA will not be extended to general partnerships in 2025 as previously announced, but the government remains committed to introducing MTD for ITSA to partnerships in the future.

Under MTD for ITSA, businesses, self-employed individuals and landlords will keep digital records, and send a quarterly summary of their business income and expenses to HMRC using MTD compatible software. In response they will receive an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they can add any

non-business information and finalise their tax affairs using MTD compatible software. This will replace the need for a Self-Assessment tax return.

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