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Making Tax Digital for Income Tax Self-Assessment

The extension of the Making Tax Digital system – called Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) – is due to be rolled out from April 2026.

Making Tax Digital is the requirement to submit information to HMRC digitally, using approved software.

Under MTD for ITSA, businesses, self-employed individuals, and landlords will keep digital records, and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software.

They will then receive an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they can add any non-business information and finalise their tax affairs. This will replace the need for a Self-Assessment tax return.

Making Tax Digital from April 2026

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.

Making Tax Digital from April 2027

Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most people will be able to join voluntarily beforehand.

Income below the £30,000 threshold

The Government has announced a review into the needs of smaller businesses, particularly those under the £30,000 income threshold. The review will consider how MTD for ITSA can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations. It will also inform the approach for any further rollout of MTD for ITSA after April 2027.

Mandating of MTD for ITSA will not be extended to general partnerships in 2025 as previously announced.

It is essential to be prepared. To get ready, you must be using MTD compliant software in which you digitally record all your business transactions.

Our advice at Optimum is to plan now. For help with planning for Making Tax Digital for Income Tax Self-Assessment, please get in touch.

Our accountancy team work with business owners in Swindon, Cheltenham and the surrounding area on business planning and tax planning, and can help you get your business ready for MTD for ITSA.

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