A new policy paper has been released by HM Revenue and Customs (HMRC) on Making Tax Digital for Income Tax Self Assessment for sole traders and landlords.
The new tax information and impact note supersedes the previous one and incorporates the changes in scope and timelines announced in December 2022, and other policy amendments and improvements made in the Autumn Statement 2023.
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) revolves around requiring businesses and landlords to keep digital records and update HMRC each quarter using compatible software.
The policy paper outlines that MTD for ITSA will be introduced for sole traders and landlords in two phases:
- For those with qualifying income over £50,000, from April 2026.
- For those with qualifying income over £30,000, from April 2027.
The government plans to introduce MTD for ITSA for partnerships at a future time.
The government feel that MTD for ITSA will reduce tax errors, but if the introduction of MTD for ITSA affects you then it may mean making adjustments to the way you currently handle your accounting records. It may also mean keeping more up-to-date with bookkeeping because of the requirement to submit quarterly returns.
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HM Revenue & Customs (HMRC) reports that more than 6.36 million people have already submitted their Self Assessment tax return for the 2024/25 tax year. However, they say around 5.65 million taxpayers still need to file, with the statutory deadline of 31 January 2026 now close.
The start of a new year is a natural moment to take stock of your business. You probably have ambitions for your business, but you also want it to help you reach your personal goals.