MTD For ITSA
April 2024 seems like a long way away, but there’s something small business owners, landlords and sole traders need to know. 
 
Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) will affect the way you report your earnings. 
When does MTD for ITSA start and who will be affected? 
Her Majesty’s Revenue and Customs (HMRC) says that MTD for ITSA will come into effect from 6 April 2024. Self-employed business owners and landlords with total business or property income above £10,000 per year will need to keep digital records and submit their self-assessment tax returns online. 
 
MTD for ITSA also applies to general partnerships which must meet these requirements from 6 April 2025 if they have more than £10,000 of qualifying income and only have individuals as partners. 
 
It hasn’t yet been confirmed when limited liability partnerships (LLPs) and partnerships with corporate partners will need to meet the requirements. 
 
Since 2018 eligible business owners and landlords have been able to take part voluntarily as part of the pilot scheme
 
What you must do 
When MTD for ITSA comes into effect you will need to: 
be signed up for MTD for ITSA which you or your agent can do on HMRC’s website 
keep digital business records 
use compatible accounting software for MTD for ITSA 
send digital business income and expense updates every quarter to HMRC using the software 
provide a final declaration of income at the end of the year where you must confirm that your quarterly updates are correct or make any accounting adjustments 
 
Submitting your final declaration to HMRC will replace the current annual Self Assessment tax return
 
Why must I give quarterly updates? 
Evidence – your quarterly update will confirm that you are keeping your digital business records up to date. 
 
Estimate your tax – you can use the profit you report each quarter to estimate the tax that will be due at the end of the year. This will be reflected on your online account, so you can put by enough money to pay your tax bill when it’s due. However, if your accounting period doesn’t match the tax year, you will have some additional work to do to have a clear picture of your tax bill. 
 
Accurate data – the government will use the information it receives each quarter to review the wider state of the economy and make decisions. Potentially HMRC could also highlight in advance any unusually high expenses that wouldn’t normally be expected for your business type which could help you to avoid miscalculations. 
 
What information must I provide? 
Each quarterly summary should include your income and expenses for: 
6 April to 5 July 
6 July to 5 October 
6 October to 5 January 
6 January to 5 April 
 
Alternatively, you could choose to base your updates on calendar quarters on the first day of April, July, October and January. 
 
Whichever approach you choose you must make your submission by: 
5 August 
5 November 
5 February 
5 May 
 
Your final declaration will also have to be submitted digitally with details of any personal income and tax reliefs included in an end of period statement (EOPS) for each source of income you have. Currently you will still have to pay your tax bill by midnight on 31 January of the following year. 
 
To find out more about MTD for ITSA and how it could affect your business please get in touch
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