The way you report your income to HMRC is evolving. The government's Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) initiative is bringing about significant changes to how certain taxpayers manage their records and tax reporting. It's crucial to be prepared, and Towers & Gornall is here to ensure you're not caught off guard.
MTD for ITSA in a nutshell
This initiative mandates a more digital approach to income tax. Here's what it means for eligible self-employed individuals and landlords:
- From 6 April 2026: If your annual gross income from self employment, rental income, or both sources is over £50,000, you will need to:
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- Maintain digital records of all your income and expenses using MTD-compatible software.
- Submit quarterly updates of this information directly to HMRC via your software.
- Complete an annual finalisation process, covering all your taxable income, including any sources outside the immediate scope of MTD for ITSA.
- From 6 April 2027: These same requirements will extend to individuals with an annual gross income of over £30,000.
Who is affected?
MTD for ITSA directly impacts you if you are:
- Self-employed (including sole traders).
- A landlord earning rental income from property.
- Your total qualifying income from these combined sources exceeds £50,000 (from April 2026) or £30,000 (from April 2027).
Important Note: Currently, partnerships and limited companies are not subject to these specific MTD for ITSA rules, though further digital changes may be introduced for them in the future.
VAT reporting
For VAT-registered businesses, these changes might prompt a review of your current VAT reporting period. Aligning your VAT reporting with your MTD updates for ITSA, perhaps by switching to monthly VAT reporting, could simplify your overall digital submissions to HMRC.
How Towers & Gornall can support you
We understand that regulatory changes can feel overwhelming. Rest assured, the team at Towers & Gornall is fully equipped and ready to guide you through every step of this transition with confidence. We're here to help by:
- Assessing your unique circumstances to confirm if MTD for ITSA applies to you (we encourage you to also consider if your situation has recently changed).
- Recommending HMRC-approved software solutions that are the perfect fit for your business needs.
- Providing hands-on support to set up robust and efficient digital record-keeping systems.
- Handling your quarterly submissions and year-end finalisation processes on your behalf, if required.
Your next steps towards MTD compliance
If you believe MTD for ITSA might impact you, or if you're unsure about your income threshold, we strongly encourage you to get in touch with us as soon as possible. Our commitment is to ensure your full compliance and peace of mind, well in advance of these new deadlines.
