What is MTD for ITSA?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is a new way for self-employed business owners and landlords to report earnings and pay Income Tax.
MTD for ITSA will apply to individuals from April 2024, if their total gross income from self-employment and property exceeds £10,000 in a tax year.
The rules for ITSA for MTD are constantly changing and you may find it hard to keep up!
Below lists all of the key, important points you may need to know regarding ITSA for MTD.
- Business owners and landlords will no longer file an annual self-assessment tax return, unless exempt from MTD for ITSA. If you are not exempt, you will need to keep digital records and submit quarterly returns to HMRC as well as complete a year-end reconciliation.
- The draft legislation suggests the £10,000 income threshold relates to the income for the accounting period two years before the period in question. To put it simply, for a period ended 5 April 2025, it would be the income for the period ended 5 April 2023.
- The £10,000 threshold is turnover and not profit! Where you may have more than one source of income (such as property income) you will be required to add the turnover from both sources together to determine whether or not you have exceeded the threshold.
- The quarterly updates are due for submission one month after the end of the quarter. There will be no changes to the date of the payment of the income tax due.
- ITSA for MTD is to be introduced in phases. Self-employed individuals and landlords with a turnover over £50,000 will be mandated to join first from April 2026. Those with a turnover over £30,000 will be mandated from April 2027.
What will it involve?
Get in touch with a member of #TeamSAS for more advice or guidance
