Making Tax Digital for Income Tax delayed

Making Tax Digital for Income Tax (MTD ITSA) was originally planned to be introduced from April 2018 and has been beset by a series of HMRC delays.

On 19th December it was announced by the Financial Secretary to the Treasury, that Making Tax Digital for Income Tax Self Assessment will be delayed again.

Before the announcement, Making Tax Digital for Income Tax was mandated from April 2024 where you had total gross income of over £10,000 from self-employment or property in a tax year.

The delay means Making Tax Digital for Income Tax will be mandated in a phased way from the following dates:

• April 2026 – Mandated for businesses, self-employed individuals and landlords with income exceeding £50,000
• April 2027 – Mandated for businesses, self-employed individuals and landlords with Income exceeding £30,000
• The Government plans to carry out a review of small businesses with income below £30,000 to look in detail how the Making Tax Digital and Income Tax Self Assessment services can be shaped to meet their needs.

As per the latest announcement, it doesn’t seem likely that you will have to be comply with Making Tax Digital for Income Tax requirements until at least April 2027, given that the total gross income from your property business falls below the £30,000 threshold.

Partnerships which were due to join the scheme in April 2025 will not need to do so until a later date, yet to be decided.

The new penalty regime harmonising late submission and late payment penalties for self-assessment with those for VAT, will also follow client’s introductions to Making Tax Digital.

It is anticipated that you will be able to use the new system voluntarily before you are mandated to do so and Jim Harra, HMRC Chief Executive and First Permanent Secretary, said the new phased approach “will allow us to work together with our partners to make sure that our self-employed and landlord customers can make the most of the opportunities this will bring”.

It is also important to note that Making Tax Digital for VAT has already been introduced and is demonstrating the benefits to businesses of digital ways of working. Although the mandatory use of software is now being phased in from April 2026, rather than April 2024, there are still many benefits to keeping digital records and as software providers launch new products to digitise records it remains a great idea to adopt these so you are ready for the formal introduction of Making Tax Digital for Income Tax.

Date published 20 Dec 2022 | Last updated 20 Dec 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.