MTD for ITSA delayed until 2026

The government has announced a two-year delay to the introduction of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), along with major changes to the income thresholds for those affected.

MTD for ITSA had previously been scheduled to start in April 2024, and self-employed business owners and landlords with a total business and/or property income above £10,000 per year had been due to comply from that date.

However, Victoria Atkins, the Financial Secretary to the Treasury, released a ministerial statement on 19th December 2022 setting out significant adjustments to the scope and timing of MTD for ITSA. The key points are:

• MTD for ITSA will now be introduced from April 2026, two years later than previously planned.
• Self-employed individuals and landlords with income over £50,000 will be mandated to comply first.
• Those earning more than £30,000 will be mandated to comply in 2027.
• The government will review the needs of self-employed individuals and landlords with income under the £30,000 threshold before laying out any further plans.
• Partnerships will not be brought into MTD for ITSA in 2025 as previously planned, but the government “remains committed to introducing MTD for ITSA to partnerships at a later date”. No mention was made of when MTD for ITSA might apply to limited companies.
• A new penalty system designed to harmonise penalties for MTD for ITSA with those for MTD for VAT will come into effect for taxpayers when they are required to comply with MTD for ITSA.

Updated guidance on MTD for ITSA is now available on the government’s website. Here at FreeAgent, we’re assessing the impact of this news and we’ll update the relevant information on our website in due course. 

We will update our Partner resources after Christmas to make sure you have suitable assets available to share with your clients in the New Year.