Making Tax Digital for Income Tax Update

What is MTD ITSA?

Making Tax Digital (MTD) is a UK government initiative that aims to modernise the tax system by requiring businesses, self-employed individuals, and landlords to keep track of their tax affairs digitally and submit their tax returns online.

MTD for Income Tax (MTDfIT) is a part of the MTD initiative that focuses specifically on the self-employed and landlords. It requires these individuals to keep digital records of their income and expenses and to submit their tax returns online using compatible software. MTDfIT is being phased in gradually from 2026, and it is currently only required for those with turnover above a certain threshold, but the government has stated that it plans to eventually require all self-employed individuals and landlords to use MTDfIT.

What are the requirements?

MTD for Income Tax (MTDfIT) is currently only required for self-employed individuals and landlords with turnover above a certain threshold. The threshold is £10,000 per year. This means that if your turnover is below £10,000 per year, you are not required to use MTDfIT.

However, the government has stated that it plans to eventually require all self-employed individuals and landlords to use MTDfIT, and it is expected that the threshold will be lowered over time. It is not yet clear when MTDfIT will become compulsory for all self-employed individuals and landlords, but it is likely to happen at some point in the future.

It is important to note that even if you are not currently required to use MTDfIT, you may still be able to choose to use it voluntarily if you wish to do so. This may be a good option if you want to take advantage of the benefits of using digital tools to manage your tax affairs.

How to register for MTD ITSA?

To register for MTD for Income Tax (MTDfIT), you will need to follow these steps:

Check if you are eligible: MTDfIT is currently only required for self-employed individuals and landlords with turnover above a certain threshold. The threshold is £10,000 per year. If your turnover is below this amount, you are not currently required to use MTDfIT.

Choose compatible software: In order to use MTDfIT, you will need to use software that is compatible with the MTD system. There are several options available, including commercial software, spreadsheets, and apps. You should choose a software that meets your needs and is compatible with the MTD system.

Register for MTD: To register for MTDfIT, you will need to go to the GOV.UK website and follow the steps to sign up. You will need to provide your personal and contact details, as well as information about your business or rental properties.

Set up your digital records: Once you have registered for MTDfIT, you will need to set up your digital records. This will involve keeping track of your income and expenses digitally and storing them in a format that is compatible with MTDfIT.

Submit your tax return: Once you have set up your digital records, you will be able to submit your tax return using your compatible software. You will need to do this by the deadline for submitting your tax return, which is usually 31 January following the end of the tax year.