Making Tax Digital for ITSA

Making Tax Digital for Income Tax Self Assessment has been delayed by a further two years.

The changes were confirmed by the First Secretary to the Treasury today, who wrote:

“The government understands businesses and self-employed individuals are currently facing a challenging economic environment, and that the transition to Making Tax Digital for ITSA represents a significant change for taxpayers, their agents, and for HMRC,”

The government is allowing businesses and agents more time to prepare for Making Tax Digital in order that “all businesses, self-employed individuals, and landlords within scope of MTD for Income Tax, but particularly those with the smallest incomes, can adapt to the new ways of working.”

The information around this extension was leaked at 9am on Wednesday 14th December in a post on the website which was quickly taken down.

This change in timetable approaching MTD for ITSA was made following several weeks of calls for action from professional bodies, including the CIOT (HMRC’s Administrative Burdens Advisory Board) as well as software company representatives.

Victoria Atkins, the financial secretary to the Treasury, gave a a ministerial statement setting out adjustments made timing and scale of MTD ITSA:

  • A delay until April 2026 for mandatory MTD for ITSA filing. (2 years)
  • Minimum income reporting level upped to £50,000 (those earning more than £30,000 will to join the scheme in 2027.)
  • The situation for sole traders earning less than £30,000 will be reviewed in the hopes that MTD for ITSA can be moulded to meet the needs of smaller businesses.
  • Partnerships will no longer be brought into MTD for ITSA (this was planned for 2025.)
  • A points-based penalty system to be extended to filers.

While the government is said to remain committed to introducing MTD for ITSA to partnerships in the future, the decision on when this will commence is to be taken in the future. The same can be said for those earning less than £30,000.

This is an all-too-familiar story for those involved in UK tax. The original timetable for MTD for ITSA had a 2021 start which was then delayed to 2024.

For more information on how this affects your own specific circumstances, please contact us directly as all information in our articles is general.