The outcome from the Making Tax Digital (MTD) small business review is that MTD for income tax self-assessment (ITSA) will not be extended to those earning under £30,000 for the foreseeable future.
MTD ITSA for the self-employed and landlords is to be introduced from April 2026. With the initial mandate applying to those with income over £50,000. Those with income between £30,000 and £50,000 are set to join from April 2027.
The government said it would review the needs of smaller businesses – those with income under the £30,000 threshold – before extending MTD further. The latest announcement means there will be no extension, although the decision will be kept under review.
There is no set mandation date for general partnerships (those with individuals), non-general partnerships (those with a corporate partner) and limited liability partnerships.
An important point to note is that the £30,000 and £50,000 limits apply to total self-employment and property income, and not to the profits actually made.
Reporting
Some reporting changes have also been announced:
- Year-end reporting was originally going to consist of two separate steps – an end-of-period statement and a final declaration. This would have caused considerable confusion, so there will now be just the one final declaration; and
- Quarterly reports are now to be cumulative. Any errors will simply be corrected on the next report – rather than the previous requirement to resubmit past quarters.
Ongoing concerns
There are still concerns that HMRC has simply lost sight of the needs of taxpayers. A recent House of Commons committee report criticised the project’s spiralling costs, design flaws and missed deadlines.
The report recommends HMRC research what business taxpayers would actually find most helpful. Also, to take into account the substantial costs of implementing MTD.
HMRC’s guide to using MTD ITSA can be found here.
How can we help?
Making Tax Digital for income tax self-assessment will apply to those earning over £30,000 in the near future and therefore if this will impact you, and you need assistance, please contact us on 01444 716946 or on 01273 963656, or alternatively email us here for help.