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What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will be coming into effect in April 2024 and will affect all unincorporated businesses and landlords with a gross income of over £10,000.

How will that affect me?

If you are eligible for MTD ITSA you will be required to submit quarterly returns of their income and expenditure to HMRC through MTD compatible software. This will be followed by a final declaration at the year end.

  • You will be required to:
  • Sign up for MTD ITSA with HMRC
  • Keep digital records
  • File through MTS compatible software
  • Submit a Final Declaration to HMRC which will replace the Self-Assessment Tax Return

When do I report under MTD ITSA?

For an accounting period that matches the 2024-25 tax year, your reporting deadlines would be:

  • 1st quarter (6 Apr to 5 Jul) is due 5 August 2024
  • 2nd quarter (6 Jul to 5 Oct) is due 5 November 2024
  • 3rd quarter (6 Oct to 5 Jan) is due 5 February 2025
  • 4th quarter (6 Jan to 5 Apr) is due 5 May 2025
  • 31 January 2026 – End of Period statement (EPOS) and final declaration due

The deadline for payment of the previous year’s tax is the same as it is under the current Self-Assessment system – 31 January.

You may also need to make a payment on account toward the current year’s tax. This will be due by 31 July.

How do I prepare for MTD ITSA?

You should take to following steps to sign up for MTD ITSA and we recommend that you do this well in advance of it becoming mandatory.

  • Start using compatible digital software if you are not already doing so.
  • Sign up for MTD ITSA with HMRC

Signing up for MTD ITSA

You can sign up through a recognised provider who offers software that works with Making Tax Digital for Income Tax.

You will need your:

  • business name
  • business start date or the date you started collecting property income
  • email address
  • National Insurance number
  • accounting period
  • accounting type such as cash or standard accounting

To sign up, you must also be registered to file Self-Assessment tax returns. You’ll need the Government Gateway user ID and password you use to file returns.

If you do not have a user ID, you can create one when you sign up.

We will of course be on hand to help you through this transition and ensure you are compliant.

For further details email helen@hmsaccounting.co.uk

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helen

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