On 19 December 2022, the UK Government announced that the first phase of Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will now be mandated starting from April‌‌‌ ‌‌2026, rather than from April‌‌‌ ‌‌2024.

This change has been made as the government acknowledges that businesses are facing a challenging economic environment and that the transition to MTD for ITSA for the self-employed and small landlords represents a significant change for taxpayers, you as agents, and the HMRC. 

This means that self-employed individuals and unincorporated landlords with an income of more than £50,000 will now have an additional two years to prepare for MTD ITSA.

HMRC is continuing to prepare for the transition to MTD for ITSA. This includes the testing of the service to ensure that it works for taxpayers and agents.

At Watson Knipe, we will continue supporting our clients now, by helping them keep digital records and preparing them to sign up ahead of mandation. 

More details that may be of interest to you, include:

• From April‌‌‌ ‌‌2026, self-employed individuals and landlords with an income of more than £50,000 will be required (mandated) to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software
• Those with an income of between £30,000 and up to £50,000 will need to do this from April‌‌‌ ‌‌2027
• Most taxpayers within the scope of MTD for ITSA will be able to sign up voluntarily before they are mandated to do so
• The UK Government will not extend MTD for ITSA to general partnerships in 2025. The government remains committed to introducing MTD for ITSA to partnerships later, to be confirmed
• The UK Government will review the needs of smaller businesses, and particularly those under the £30,000 threshold before taking further decisions. This will look in detail at how the MTD for ITSA service can be shaped to meet their needs and the best way for them to fulfill their Income Tax obligations. Once that review is complete – and in consultation with businesses, taxpayers, agents, and others – the UK Government will lay out the plans for any further mandation of MTD for ITSA

It is good news that there has been a delay in putting MTD in place, but we do suggest that in the meantime it is worth considering starting to use software that is MTD compatible. This link allows you to find out more – Find software that’s compatible for Making Tax Digital. For landlords and property investors we have partnered with Hammock Property Finance Platform, this is compatible with Making Tax Digital and will help you save time and money.