Making Tax Digital for Income Tax Self Assessment Delayed

After its implementation was already delayed from April 2023 to April 2024 due to the pandemic, it was announced on Monday that once again, Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) has been postponed until April 2026.

What is MTD for ITSA?

Under the original MTD for ITSA rules, the self employed, and landlords who earn more than £10,000 per tax year will be required to submit regular updates with digital records using MTD compatible software to HMRC. This means that for these people, self assessment returns can no longer be submitted either via paper form or the HMRC online portal (in a similar way to how MTD impacted the submission of VAT returns in 2019).

What will need to be submitted, and when?

Under MTD for ITSA, instead of an annual self assessment return covering the entire tax year, there will now be 6 submissions required, namely:

  • 4 quarterly updates, due within 1 month of the end of each quarter.
  • An End Of Period Statement (EOPS), due by the 31st January following the end of the tax year in question. This statement will be used to make any final adjustments to the previous submissions made, and a separate EOPS will be required for each source of income.
  • A Final Declaration, once all of the above have been completed, and all income for the year has been declared, you must then submit the Final Declaration which is a statement to accept your final tax position for the year calculated by HMRC.
What the postponement means?

It is important to note that this is just a postponement, rather than a scrapping of MTD for ITSA. Therefore, notwithstanding any future delays, all of the above will still be implemented, just in April 2026 rather than April 2024.

However, as part of this postponement, the government have announced that now, MTD for ITSA will only apply to the self employment/landlords with income over £50,000 from 2026, rather than the original £10,000. Then, in April 2027, it will be introduced for those with income between £30,000 and £50,000, with a review being undertaken into whether this threshold should drop further after 2027.

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