MTD for ITSA, we asked our tax team to update us on the latest.
It’s crucial for landlords and self-employed individuals with a turnover of more than £10,000 to understand and prepare for Making Tax Digital for income tax self-assessment (MTD for ITSA). This initiative, part of HMRC’s broader digital transformation, is set to change the way taxpayers record and report their income.
MTD for ITSA has an April 2026 deadline. Getting your processes and systems set up in good time will make hitting this date a formality rather than a challenge.
Understanding MTD for ITSA
MTD for ITSA is a significant shift in the tax reporting landscape. It requires landlords and self-employed individuals with annual business or property income above £10,000 to use HMRC-approved software to keep digital records and submit updates.
This move is designed to make the tax process more efficient and effective, and for taxpayers, easier to get their tax right.
The benefits of MTD for ITSA
While the transition to digital record-keeping might seem daunting, it offers several advantages:
Digital records reduce the likelihood of errors and ensure accurate reporting.
Real-time tracking of income and expenses enables better financial management.
Regular updates to HMRC reduce the chances of missed deadlines or incorrect tax filings.
Timeline and preparation
The April 2026 deadline might seem distant, but preparation should begin now. The key steps include:
Understanding the requirements of MTD for ITSA
Familiarise yourself with the specifics of MTD for ITSA. HMRC provides a wealth of information and guidance.
Choosing the right software
Select software that meets HMRC requirements and suits your business needs. Many software providers offer trial periods, so you can find the one that works best for you.
Transitioning to digital records
Begin transitioning your records to digital format. If you’re currently using software, check if it’s MTD-compatible.
Seek professional advice
Consider consulting an accountant or tax advisor (like us), particularly if your financial affairs are complex.
Potential challenges and solutions
Transitioning to a new system always has its challenges. Some of the common ones include:
Adapting to new technology
Problem: Not everyone is tech-savvy.
Solution: Look for user-friendly software and seek training if necessary.
Initial setup costs
Problem: There may be costs involved for purchasing software.
Solution: Look for cost-effective options and check if there are any subsidies or tax relief available.
Problem: Initially, setting up and learning new systems can be time-consuming.
Solution: Start early to allow ample time for adjustment.
Support and resources
Thankfully, HMRC is committed to supporting taxpayers through this transition. They offer:
Guidance and webinars
Regular updates, guidance documents, and webinars are available on HMRC’s website.
Help and support
Dedicated helpdesks and online resources for technical issues.
Platforms where you can share experiences and tips with other taxpayers.
The move to MTD for ITSA represents a significant change, but it’s one that comes with many long-term benefits. By starting your preparation early, you can ensure a smooth transition and take full advantage of the efficiencies and accuracies that digital record-keeping offers.
Remember, the April 2026 deadline is closer than it seems, and now is the time to act.
Stay informed, choose the right tools, and don’t hesitate to seek professional advice if needed. The future of tax is digital, and it’s time to get on board.
If you would like to speak to a member of the RPGCC tax team regarding MTD for ITSA you can contact us on 020 7870 9050 or use our webchat in the bottom right corner. In office hours this is manned by our team, you can leave a message outside. A member of our team is only a click or a phone call away.