Extension of MTD for Income Tax Self-Assessment to businesses and Landlords

For those with business and/or property income over £10,000, the government has extended the requirement to operate Making Tax Digital (MTD).

This impacts the 4.2m taxpayers who have businesses, are self-employed individuals and landlords who are chargeable to Income Tax.

MTD for Income Tax Self-Assessment (ITSA) will now be introduced in April 2024. This is a year later than originally planned due to the challenges faced by many during the pandemic.

What is Making Tax Digital (MTD)?

MTD is a key part of the government’s 10-year strategy to move towards a modern, digital tax service. The aim is to “build a trusted, modern tax administration system” which will increase business productivity and provide better support for taxpayers.

MTD was introduced in April 2019 for those VAT-registered businesses with taxable turnover above the VAT threshold. While VAT-registered businesses with turnover below the VAT threshold will find MTD introduced from April 2022.

Although, over a quarter of VAT-registered businesses below the VAT threshold have already decided to take the plunge and voluntarily joined MTD VAT.

The government has said that MTD users have indicated that preparing and submitting returns is easier and offers improvement in managing tax affairs and using technology.

Under MTD, businesses must keep digital records and use third-party software to submit their tax returns to HM Revenue and Customs (HMRC). Under the changes, those mandated to use MTD ITSA will need to keep records digitally, sending a quarterly summary of income and expenses with an end of year report, using MTD compatible software.

Find out more about Making Tax Digital (MTD) – Customer Costs and Benefits for the Next Phases of MTD.