Digital Self-Assessment Delay

The Treasury has announced that Making Tax Digital (MTD) for income tax self-assessment will be delayed until April 2026.

Digital self-assessment was due to come into play from April 2024 and would have required all self-employed individuals and landlords with income over £10,000 to report earnings quarterly through the MTD for ITSA system.

Victoria Atkins, Financial Secretary to the Treasury, has released a statement:

‘Across the globe, digitalisation of tax is increasingly the norm. Modernisation of UK businesses and the tax system remains of crucial importance to the UK.

Making Tax Digital (MTD) for VAT is already demonstrating the benefits to businesses that digital ways of working can bring.

MTD for Income Tax Self-Assessment (ITSA) will follow, with businesses, self-employed individuals, and landlords keeping digital records and using MTD-compatible software to submit updates to HM Revenue and Customs.

The government understands businesses and self-employed individuals are currently facing a challenging economic environment, and that the transition to MTD for ITSA represents a significant change for taxpayers, their agents, and for HMRC.

That means it is right to take the time needed to work together to maximise those benefits of MTD for small business by implementing gradually.

The government is therefore announcing more time to prepare, so that all businesses, self-employed individuals, and landlords within scope of MTD for Income Tax, but particularly those with the smallest incomes, can adapt to the new ways of working.’

When will MTD for ITSA be introduced?

The mandation of MTD for ITSA will now be introduced from April 2026, with businesses, self-employed individuals, and landlords with income over £50,000 mandated to join first.

Those with income over £30,000 will be mandated from April 2027.

The government will now review the needs of smaller businesses, and particularly those under the £30,000 threshold. This will look in detail at whether and how the MTD for ITSA service can be shaped to meet the needs of smaller businesses and the best way for them to fulfil their Income Tax obligations. Once that review is complete - and in consultation with businesses, taxpayers, agents, and others - the government will lay out the plans for any further mandation of MTD for ITSA.

What should I do?

Currently no immediate action is necessary however getting ahead of the game and learning online accounting software would be an excellent habit to create. We can help you with this. Take a look at our cloud accounting software offers or get in touch with your Swindells’ partner if you have any questions.