MTD for ITSA delayed for two more years

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

MTD for ITSA was due to take effect 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, confirmed that the mandation of MTD for ITSA will now be introduced from April 2026. Businesses, self-employed individuals and landlords with income over £50,000 will be required to join first. From April 2027, those with income over £30,000 will be mandated to join, the Treasury said.

In a written statement, Ms. Atkins said:

“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 Treasury has declared that the government now intends to review the needs of smaller businesses regarding MTD for ITSA and will consider how the initiative can be shaped to meet their needs.

Once the review is finalised, the government will outline plans for any further mandation of MTD for ITSA.

The Treasury also stated that the government will not extend MTD for ITSA to general partnerships in 2025, saying that the government ‘remains committed to introducing MTD for ITSA for partnerships at a later date‘.

Amy Telford, Director at HTB Accountants, has encouraged business owners to be patient with the delay, as the result will be beneficial in the future:

“Although there is an air of uncertainty around MTD at the moment, all VAT returns from 1st April 2022 onwards must be filed under MTD rules. This will very much be beneficial for businesses in the long run. An automated VAT process slashes the probability of human error and fraud.”

“In the meantime, HTB Accountants will be on hand to help with a variety of enquiries about MTD.”

For more information on this update, visit the UK Parliament website.