MTD for ITSA set to be postponed to 2026
The original roll-out date 'was always going to be extremely difficult' to achieve, market participants have said
Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) was slated for April 2024, but it has emerged that the programme to digitise the UK tax system will be pushed back to 2026.
The decision to postpone MTD for ITSA was revealed after HMRC updated their MTD for ITSA departmental page. It said: “The dates for helping HMRC test and develop Making Tax Digital for Income Tax have been extended to 6 April 2026.”
This update has since been removed from the HMRC website.
‘No great surprise’
Paul Falvey, tax partner at BDO, says a further delay to MTD for ITSA would “come as no great surprise”.
“It was always going to be extremely difficult to introduce this in 2024, given the lack of available software and the fact that the project has not yet been properly tested.”
It will be a “relief” to many individuals who will not have to “fork out for new tax software during a recession”, he adds.
HMRC’s MTD for ITSA would have led to 4.2 million self-employed workers and small businesses to file tax returns multiple times a year — from April 2024.
The plan for the self-employed and small businesses to file their tax returns digitally has already been delayed due to the pandemic. It was initially meant to be implemented in April 2023.
Lucy Cohen, co-founder of Mazuma Money believes the consecutive delays mean “MTD [for] ITSA feels like the boy who cried wolf.
“How are accountants supposed to get their clients engaged with any sort of change when HMRC keep pushing back the date with such little warning,” she adds
Cohen’s advice to accountants is to continue as usual and “get your client bases using the tech and processes that would make a press of the big red button easy for you to handle, no matter when it comes.”
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MTD for ITSA will apply to individuals’ annual income of more than £10,000. Most businesses will have two years to prepare and test the service voluntarily prior to its introduction.
Since April 2022, all VAT-registered businesses have been required to keep digital VAT records and send returns using MTD-compatible software.
Accountancy Age reached out to HMRC, but a spokesperson for the Revenue said: “We cannot comment on speculation around tax changes.”