News - HMRC

MTD for Income Tax Self-Assessment to be delayed

3 November 2021

It has been confirmed that Making Tax Digital for Income Tax Self-Assessment, MTD for ITSA, will be introduced a year later in April 2024 instead of April 2023. The Government recognises the challenges faced by many UK businesses as the country emerges from the COVID 19 pandemic, which has affected many over the past year and a half.

MTD was first announced in the 2015 budget, and following a formal consultation in 2016, the first phase was implemented in April 2019 for VAT.

For VAT periods starting on or after 1 April 2019, VAT-registered businesses with a turnover above the VAT registration threshold have needed to keep their records digitally and provide their VAT return information to HMRC through MTD-compatible software.

In July 2020 the Government set out its vision for the future of tax administration in the UK. Extending MTD with the expansion of mandatory MTD VAT from April 2022 and the introduction of mandatory MTD ITSA from April 2024, a year later than previously announced, is critical to this.


What is MTD for ITSA and who will it affect?
MTD for ITSA is for Businesses, self-employed people and landlords with income over £10,000. They will be required to operate MTD from 6 April 2024 in relation to their trading and property income chargeable to Income Tax and Class 4 NICs.

They must keep their records digitally (for ITSA purposes only), provide digital quarterly updates and provide their ITSA return information to HMRC through MTD compatible software. This means business owners and landlords will no longer file an annual self-assessment tax return, unless exempt from MTD for ITSA. Instead, each business will need to file four quarterly updates and an End of Period Statement to finalise business profits. A Final Return with any other income, gains or reliefs will also need to be submitted.


When will MTD for ITSA be compulsory?
Individuals with self-employment income or property income will need to comply for the year beginning 6 April 2024. General partnerships will need to comply from 5 April 2025.

Below is an example of the first returns that will be due for submission under MTD for ITSA, for an accounting year that runs from 6 April 2024 to 5 April 2025:

PeriodDue date
1st returnQ/E 5 July 20245 August 2024
2nd returnQ/E 5 October 20245 November 2024
2023-24 return (previous year)Y/E April 202431 January 2025
3rd returnQ/E 5 January 20255 February 2025
4th returnQ/E 5 April 20255 May 2025
5th return (final year-end report)Y/E 5 April 2025 January 2026


For unincorporated businesses with an accounting period other than 5 April, the Government plans to simplify the process by reforming basis periods, see the consultation here for further details.


How we can help?
At Alexander Myerson & Co we are carefully following the guidance and legislation being put in place by HMRC and will be identifying which of our clients may fall under MTD for ITSA.

Those clients that we identify that may fall under MTD for ITSA we will consult them and discuss the options to become compliant.

We will assist clients in implementing the relevant software, ensuring all the historical data is safe.

We will support clients as much as possible with the changes.

Once clients are up and running with a MTD for ITSA compliant solution, we will ensure the first submission is submitted on time.


Other considerations
Tax payments – There’ll be no change to how/when Income Tax is currently paid.

Penalties – The penalties for not complying with MTD will be covered by the non-submission penalty points system.

VAT registered businesses – Will still have to make separate submissions for VAT.


If you need any further assistance and help in getting ready for MTD for ITSA in time, please contact us here.