MTD ITSA DELAYED UNTIL 2026 !
Making Tax Digital for Income Tax Self Assessment DELAYED UNTIL 6 APRIL 2026
HMRC have made a significant statement confirming that Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) for self-employed individuals and landlords will now be delayed until 6 April 2026.
The government were keen to push for the digital submission of all of our tax filings to HMRC. This means that, in time, the filing of paper submissions will no longer be accepted. MTD for Income tax will require businesses to have their records held digitally on MTD-compatible software. However, achieving this goal by 6 April 2024 has been widely criticised and has now been pushed back by 2 years, giving individuals and businesses more time to gradually adapt to the new way of submitting our personal tax information.
Threshold for compliance increases from £10,000 to £50,000
The announcement of the delay is not the big news, the goalposts for compliance with MTD have well and truly shifted. Sole traders and landlords with income (not profits) above £50,000 will need to adhere to the new MTD for income tax legislation by 6 April 2026,. This threshold will reduce to £30,000 in 2027.
This is a hugely significant difference to the previous £10,000 threshold set by HMRC. This does mean that sole traders and landlords with income below £50,000 (£30,000 in 2027) can continue using the existing Self-Assessment system.
The government will now review smaller businesses' needs, particularly those under the £30,000 threshold. This will look in detail at whether and how the MTD for ITSA service can be shaped to meet the needs of smaller businesses and the best way for them to fulfil their income tax obligations. Once that review is complete - and in consultation with businesses, taxpayers, agents, and others - the government will lay out the plans for any further mandation of MTD for ITSA.
Following the phased approach, the government will not extend MTD for ITSA to general partnerships in 2025. It remains committed to introducing MTD for ITSA to partnerships at a later date.
