MTD for ITSA officially delayed until 2026 to ‘maximise benefits’

MTD for ITSA officially delayed until 2026 to ‘maximise benefits’

The postponement should help smaller businesses in the long run, according to the Treasury

MTD for ITSA officially delayed until 2026 to ‘maximise benefits’

HMRC has officially announced that Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) has been postponed by two years.   

A component of the UK government’s initiative to digitalise the tax system, the scheme was previously slated for April 2024. The fresh postponement sees this pushed back to April 2026 to “maximise the benefits”, according to Victoria Atkins, financial secretary to the Treasury.  

“It is important to ensure this works for everyone: taxpayers, tax agents, software developers, as well as HMRC,” Atkins said. 

“Smaller businesses in particular should be able to experience the benefits of increased digitalisation of Income Tax in a way which meets their needs. 

The postponement of MTD for ITSA means that the mandatory use of software is being phased in from April 2026, rather than April 2024, with Jim Harra, chief executive and first permanent secretary of HMRC, reiterating that MTD remains “a critical part” of the Revenue’s plan to modernise the UK tax system.    

“A phased approach to mandating MTD for income tax will allow us to work together with our partners to make sure that our self-employed and landlord customers can make the most of the opportunities this will bring,” he added.      

Caroline Miskin, ICAEW senior technical manager, digital taxation, said that the delay “is the right move” but stressed that “fundamental changes to the policy and design of MTD” are needed.   

Miskin advised HMRC to undertake a “critical review” to question whether policy decisions made seven years ago are still appropriate today, with her calling for quarterly reporting to be “reconsidered” by the Revenue.  

From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software.    

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. 

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