Making Tax Digital: Income Tax Self-Assessment pilot launch

This is part of HMRC’s MTD project to reduce mistakes in tax returns which reportedly cost the Exchequer £billions annually. VAT-registered businesses have submitted their returns digitally since 2022. Eventually, MTD will apply to Corporation Tax too. For now, MTD for ITSA will apply from April 2027 for anyone with income over £30,000 annually from business or property income. 

 

Originally quarterly figures and ‘End of Period Statements’ were proposed but this requirement is removed. Joint landlords have simplified reporting requirements as well. Some automatic exemptions for unique situations will help people like foster carers or those without a National Insurance number. HMRC also says it will help people who have multiple agents to manage different parts of their financial arrangements. 

 

We can give advice about HMRC approved software to meet your needs. You currently have five options available for MTD for ITSA, with others expected soon. If you haven’t used accounting software before we can explain how it works. 

 

In the long-term, the aim is to make the taxation system more efficient and accurate. Using good accounting software helps reduce errors and you can keep everything up to date more easily. We can all see the same information at the same time. This means it’s also much easier to keep track of your finances. You can avoid any surprises at the end of the financial year and improve your financial planning. 

 

HMRC says making all accounting records digital will allow it to remind and prompt people. This will help make sure information is up to date and accurate, reducing the need for tax inquiries. 

 

If you’re affected by the Construction Industry Scheme (CIS), for example, you will see real time figures. Your bookkeeper or accountant can make sure you’re paying the right amount, reducing the need to claim refunds. 

 

HMRC understands you might work with a bookkeeper, accountant and other agents. Multi-agent access to relevant information and HMRC systems is essential for successful implementation of MTD for ITSA.