Making Tax Digital for Income Tax Self Assessment postponed until 2026

The UK government has just announced some good news for self-employed individuals and landlords. Now, they will have more time to prepare for Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA).

Why has MTD for ITSA been pushed back?

The modernisation of the tax system remains a top priority.

Businesses and self-employed individuals are in the midst of a challenging economic environment. To top it off, the transition to MTD for ITSA represented a significant change for taxpayers, their agents, and HMRC. As a result, the government is giving more time to prepare for MTD for ITSA, particularly for those with the smallest incomes. Therefore, the mandatory use of software for ITSA will be phased in from April 2026 rather than April 2024.

The digitisation of tax is increasingly becoming the norm.

However, the MTD for ITSA will be introduced in a phased approach based on income. Businesses, self-employed individuals, and landlords with an income of more than £50,000 are mandated to join in April 2026. Those with an income between £30,000 and £50,000 will be mandatory in April 2027.

Despite this recent news, the tax system’s modernisation remains crucial to the UK.

The MTD program is designed to make paying taxes more manageable and secure. It does this by requiring people to use special software to report their taxes every three months instead of once a year. This software will give people an estimate of how much tax they owe based on the information they provide. At the end of the year, people can use the software to add any extra information and finalise their tax affairs. The MTD program will replace the need for a Self-Assessment tax return.

MTD already demonstrates the benefits that digital ways of working can bring to businesses.

1. Improved Accuracy.
Rather than relying on paper, MTD allows taxpayers to input their info directly into a digital system. This can reduce errors and increase the overall accuracy of tax returns.
2. Increased Efficiency.
Using digital systems, taxpayers can quickly report their tax information to the government. This can help streamline the tax process and reduce the time devoted to tax compliance.
3. Enhanced Security.
Digital tax systems offers increased security compared to paper-based systems. This can help protect taxpayers’ sensitive financial information and reduce the risk of fraud or identity theft.
4. Better Data Analysis.
Digital tax systems can enable tax authorities to collect and analyse data. This can help them identify trends and patterns and improve the effectiveness of their tax policies.
5. Improved Accessibility.
MTD makes it easier for taxpayers to access their tax information and interact with the tax system. Moving online eliminates issues with distance, mobility issues, or other barriers.

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I need help with my tax

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There’s no doubt that scaling your business is tough. It requires tactical decision-making and a watertight strategy with one goal in mind: growth, and lots of it. Our proactive approach has seen many of our clients’ businesses thrive beyond expectations.

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