Making Tax Digital for Income Tax Self Assessment (ITSA)
Self-employed individuals and landlords will have more time to prepare for Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), following a government announcement today
There are 3 dates to know depending on your Business
5th April 2026 - ( was 5th Apr 2024) All persons that are Self-employed as a Sole trader where your Turnover is £50,000 or more.
5th April 2027 - ( was 5th Apr 2024) All persons that are Self-employed as a Sole trader where your Turnover is £30,000 or more.
5th April 2025 - All persons that are Self-employed as a Partnership. (This is currently unchanged)
5th April 2026 - All Limited Companies. (This is currently unchanged)
So what do I have to do?
1. Do I need to comply?
If your Turnover from all self employed businesses exceeds £30,000 on your previous Tax Return, then Yes, you must go digital. Once you have gone digital, you cannot go back, even if your turnover drops below £30,000.
2. Going Digital
A lot of businesses still do their bookkeeping and drawing up their accounts on paper, for example a simplex D book, or printed analysis books. When Making Tax Digital come in on your business, you must record all your business working digitally. This can be done using Software (Sage, Quickbooks etc) or a spreadsheet like Excel. If you do use a digital Spreadsheet you must use software that links your spreadsheet to HMRC digital portal, Called Bridging software.
3. Do I still need to fill in a Tax return?
It is sadly worse than that. You will now need to submit your figures 5 times a year. You must submit your business income and expenditure every quarter, once this has been submitted you will not be able to change it. So we need to make sure everything it correct each quarter. This must be done by the 5th of the following month, so you only have 4-5 weeks to complete each Digital return.
When your year has passed you must them fill in a Final Return. This is very similar to your Self Assessment Tax Return but with extra information like adjustments and capital allowances.
4. Will I have to pay my Tax quarterly?
At the moment, no. you will pay your tax exactly as you do now, After you submit your Final return a Tax Calculation will be created and then your Tax bill will become due. This must be paid by 31st Jan as it does now.
5. I have 3 businesses, do I make 1 submission.
No, you must make submissions for each type of business. For example, Mr Smith Owns a Guest house, He Sells perfume online and he also is a Taxi Driver. He must submit a separate return for each of the businesses, So 12 digital returns during the year.
6. Will this change before my digital date?
It may, Making Tax Digital has changed a few times since its creation, and Making Tax Digital for VAT (rolled out a few years ago) changed a few times.
If there are any changes we will amend this page as soon as we know.