The move towards a digital tax system was first announced in the 2015 Budget, with a timeline said to be implemented from April 2018. Several changes to the implementation timeline have been made since 2015, most recently in December 2022.

MTD for ITSA was previously due to come into effect from April 2024 and would have required all unincorporated businesses and landlords with total business or property income above £10,000 per year to report earnings quarterly through the MTD for ITSA system.

MTD for ITSA will now apply from April 2026 for unincorporated businesses and landlords, and the level of income for which this will apply first has increased from £10,000 to £50,000. From April 2027, those unincorporated businesses and landlords with income over £30,000 will then also be instructed to join MTD for ITSA.

It is worth noting that the government remains committed to the modernisation of the tax system with MTD so MTD for ITSA will still be implemented, the commencement date has just been delayed.

Despite the delay in MTD for ITSA, we would still recommend starting your move towards digital record keeping. Using a cloud accounting software to keep your records will allow you to have greater visibility with regards to your finances, with the ability to run real time reports and may help with cashflow planning. You would also be able to access your business records anywhere any time via the cloud and getting started now will make you more prepared for the time when the MTD for ITSA regime becomes mandatory.

If you have any questions on Making Tax Digital, quarterly returns or the future of the tax return then do get in touch via email (info@shawgibbs.com) or call 01865 292 200. We have started looking into MTD for ITSA software options both specifically for unincorporated businesses and landlords, so if this is something you would be interested in exploring further please do get in touch.