Making Tax Digital for Income Tax Self-Assessment (MTDITSA)

MTDITSA is coming! But what is it? Who will it affect? When is it happening?

Below you will find answers to these pressing questions, providing some insight into what will soon become a mandatory HMRC requirement.

What is MTDITSA?

Making Tax digital for Income Tax Self-Assessment is a new way of reporting income and expenses if you are a sole trader or a landlord.

To comply with the reporting requirements, sole traders and landlords will need to: –

1. Use software that works with MTD
2. Keep digital records of your business income and expenses
3. Send quarterly updates to HMRC via the MTD software
4. Submit your tax return and pay any tax due as usual by 31^st January

In April of this year, HMRC launched a pilot scheme to test and develop the service. However, current Government plans will see MTDITSA become mandatory from 6^th April 2026.

Who will be affected and when?

When MTDITSA becomes mandatory, it will affect individuals who receive income from self-employment, rental properties, or both. However, you will not need to sign up if the qualifying income (gross income from self-employment or rental properties) is under £30,000.

If you would like to voluntarily sign up to the pilot program before the service becomes mandatory, you must adhere to the following requirements:

• Your personal details are up to date with HMRC
• You are a UK resident
• You have a National Insurance number
• You have submitted at least one self-assessment tax return before
• You are up to date with your tax records with no outstanding liabilities
• Your accounting period aligns with the tax year – 6^th April to 5^th April (or 1^st April to 31^st March). This should already be the case due to the basis period reform. Details of this can be found on a previous article of ours

However, there are some stipulations with this. You cannot sign up voluntarily if:

• have a High Income Child Benefit Charge
• have a payment plan with HMRC
• are a partner in a partnership
• claim Married Couple’s Allowance
• claim Blind Person’s Allowance
• are currently, or are going to be, bankrupt or insolvent
• are an MP, minister of religion or Lloyds underwriter
• have income from being a foster carer or being in a shared lives scheme
• have income from a trust
• have income from a jointly owned property
• have income from a furnished holiday let
• are subject to a compliance enquiry
• use ‘averaging’ or other arrangements because their profits vary between years — for example, because they’re a farmer, writer or artist

For more information, and to discuss your options ready for MTDITSA becoming mandatory, please feel free to get in touch with Johnston Wood Roach Chartered Accountants and Chartered Tax Advisers in Hampshire for an informal discussion where we can discuss if MTDITSA will affect you, the software options available, and advise on how to get started.