What is MTD ITSA?

• Making Tax Digital for Income Tax Self-Assessment

Who does this affect?

• Self-employed individuals and landlords with a tax year turnover over £10k
• Partnership which consists only of individual partners
• The turnover threshold takes account of the combined turnover of a person’s total number of businesses and rental properties

Exemptions?

• Trades and/or rental income where the turnover does not exceed £10k
• A deceased person’s estate
• Registered pension scheme trustees
• Non-resident companies
• Individuals who are able to claim they are digitally excluded

What will MTD ITSA mean in practice?

• You will be required to maintain your trading/rental records in a digital format
• Primarily, during the tax year, you will need to make quarterly digital submissions to HMRC of your income and expenses as regards your trade/rental business.

When is this happening?

• April 2024 – Sole Traders and Landlords
• April 2025 – General partnerships

When will the quarterly submissions be due?

• 5^thAugust – covering the 1^st quarter to 5^th
• 5^thNovember – covering the 2^nd quarter to 5^th
• 5^thFebruary – covering the 3^rd quarter to 5^th
• 5^thMay – covering the 4^th quarter to 5^th
• The very first MTD ITSA submission will need to be made by 5^thAugust 2024

What will need to be included in the submissions?

• Details of trading/rental income and expenses for the quarter period concerned
• Broken down into categories similar to what is presently required for a self-assessment tax return

Do I have to pay my tax over at the same time as the quarterly submissions?

• At present no, you continue to pay the tax over on 31^stJanuary and 31^st July

What happens after the 4^th quarterly submission has been made?

• You have to make a further digital submission for the tax year called an end of period statement (EOPS)
• The EOPS enables you make the necessary adjustment to what has already been submitted in respect of things like capital allowances and losses
• The EOPS must be submitted by 31^stJanuary following the end of the relevant tax year
• An EOPS must be submitted for each trade

Will I need to also complete a Self-Assessment Tax Return?

• Not if you comply with MTD ITSA

How will I declare my other income and capital gains disposals?

• A finalisation statement (FS) will also need to be submitted by 31^st January 
• You would include other income and gains not already reflected in the quarterly submissions on the FS

What happens if I don’t comply?

• Financial penalties are likely to be imposed

What do I need to do?

• DO NOT LEAVE IT TOO LATE TO ACT – contact your Accountant / Bookkeeper
• Check to see if you are caught by the MTD ITSA rules and have digital software