The HMRC project for Making Tax Digital (MTD) has been talked about for several years. The first step was to make VAT registered businesses submit their VAT returns digitally, which has been completed. Their next step is the requirement for certain self-assessment details to also be digitally submitted. Dates have been set for this change, but it has been delayed on numerous occasions.
Making Tax Digital (MTD) is a government initiative to modernise HMRC’s tax system, with the aim of making the whole process of tax administration simpler and more efficient.
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. Those with an income of between ₤30,000 and ₤50,000 will need to do this from April 2027. Most customers will be able to join voluntarily beforehand meaning they can eliminate common errors and save time managing their tax affairs.
The Government has also announced a review into the needs of smaller businesses, and particularly those under the ₤30,000 income threshold. The review will consider how MTD for Income Tax Self-Assessment (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 roll out of MTD for ITSA after April 2027.