At Flexpert Accounting, we’re dedicated to keeping you informed about important tax changes. Let’s take a look into the essentials of Making Tax Digital for Income Tax Self Assessment (MTD ITSA) and how it might affect you.
What is MTD ITSA?
MTD ITSA is an initiative by HM Revenue & Customs (HMRC) to modernise the UK’s tax system. The goal is to make tax administration more efficient and straightforward by requiring digital record-keeping and more frequent income reporting.
Who Needs to Comply?
Starting from 6 April 2026, if you’re a sole trader or landlord with an annual income over £50,000, you’ll need to follow MTD ITSA rules. This means keeping digital records and submitting updates to HMRC every quarter. From 6 April 2027, this requirement will extend to those earning over £30,000 annually.
What Are the Key Requirements?
Under MTD ITSA, you’ll be expected to:
- Maintain Digital Records: Use compatible software to keep track of your income and expenses.
- Submit Quarterly Updates: Provide HMRC with summaries of your earnings and expenditures every three months.
- File an End-of-Period Statement (EOPS): Confirm the accuracy of your annual financial data and make any necessary adjustments.
- Make a Final Declaration: Declare that your submitted information is complete and correct, allowing HMRC to calculate your final tax liability.
Are There Exemptions?
Yes, certain individuals may be exempt from MTD ITSA, including those:
- With income below the £30,000 threshold.
- Who cannot engage digitally due to age, disability, or location.
- Whose religious beliefs are incompatible with digital record-keeping.
If you believe you qualify for an exemption, it’s important to apply directly to HMRC.
How Can You Prepare?
To get ready for MTD ITSA:
- Assess Your Income: Determine if your annual earnings from self-employment or property rentals exceed the relevant threshold.
- Choose Compatible Software: Select a digital accounting solution that aligns with MTD requirements.
- Stay Informed: Keep up with updates from HMRC and consider seeking advice from accounting professionals.
We will be assessing each of our clients and informing you individually on what steps you need to take next.
We will also be offering affordable sole trader packages to new clients to comply with MTD.
At Flexpert Accounting, we’re here to support you through these changes. If you have questions or need assistance with MTD ITSA, don’t hesitate to reach out. We’re committed to making your tax experience as smooth as possible!