HMRC’s Making Tax Digital (MTD) plans will ultimately create challenges for businesses, individuals and landlords alike, and our specialist tax and accounting experts are ready to assist.
MTD is changing the way in which all individuals and businesses report their financial details to HMRC.
HMRC is aiming to become one of the most digitally advanced tax administrations in the world and MTD is fundamental to realising that ambition.
The introduction of MTD is to transform tax administration to be more efficient, effective, and easier for taxpayers to get their tax right. Ultimately HMRC want to streamline filings and remove the manual re-keying of data to mitigate the risk of errors.
The first phase of the MTD journey was introduced in April 2019 with MTD for VAT, the next phase is MTD for ITSA then followed by MTD for Corporation Tax(CT).
Making Tax Digital for Income Tax Self-assessment (MTD for ITSA)
Making Tax Digital for Income Tax Self-assessment (MTD for ITSA) will be phased in from April 2026.
Those affected will be required to 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.
April 2026 – Phase 1 of MTD for ITSA
Individuals and landlords with gross income greater than £50,000.
April 2027 – Phase 2 of MTD for ITSA
Individuals and landlords with gross income between £30,000 and £50,000.
Date to be confirmed – remaining phases
Partnerships together with Individuals and landlords with gross income less than £30,000 will be phased in but the date is yet to be confirmed.
Making Tax Digital for Corporation Tax (MTD for CT)
HMRC had indicated that MTD will be extended to CT in 2026, but with MTD for ITSA being delayed there is speculation that this will also be pushed back. More to come on this in due course.
Making Tax Digital for VAT
All VAT registered businesses now need to follow MTD rules to maintain digital records and use software to submit their VAT returns. See VAT notice 700/22 for more details.
Want to learn more about how we can help?
If you would like to find out more about Making Tax Digital or if there is anything else we can help you with, please don’t hesitate to get in touch with our team.
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