December 20, 2022
Article
The government have recently announced they are delaying the mandatory date for people who fall within the criteria to comply with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) until April 2026.
They have also increased the income threshold to £50,000, from the initial £10,000 of annual income from self employment or property.
The threshold will be reduced to £30,000 for second phase of taxpayers who will need to comply from April 2027.
Previously ordinary partnerships were going to be captured from April 2025 and this has also been delayed with no revised date announced at the moment.
The increased threshold is welcomed as this will ensure taxpayers with small side line businesses or with a one to two rental properties will now not need to comply with the first and second waves.
However, although the extension allows more time for us and you, as our clients, to get prepared ahead of the mandatory dates, it is never too early to start to adjust to using digital record keeping and getting ahead to ensure you are as ready as possible for April 2026.
There are also other benefits to moving to digital record keeping ahead of the mandatory date for example, if correctly used, MTD compliant software, such as Xero, will save you a significant amount of time in managing your business finances. Details of bank transactions can auto-populate with a link to your online bank account. Sales invoices can be raised in product, emailed to customers, and overdue debts chased. Purchase invoices can be photographed and details extracted for hands-free data entry. Rules can also speed up the allocation of items to relevant areas of your accounts. On top of that, you can connect to a number of industry specific apps for stock management, job tracking, timesheets, and card payments to name a few.
It also allows us to connect and work more collaboratively with you, in terms of management information and looking at any areas of tax planning, as your income will be recorded in real time.
We are here to support you, whenever you wish to make the change to digital record keeping and get prepared ahead of MTD for ITSA. We will also keep you up to date as we move towards April 2026 and if you do have any queries about how the announcement or MTD for ITSA will impact you, please don’t hesitate to get in touch with your usual point of contact.