Making Tax Digital for Income Tax Self Assessment

Written by Chris Barlow


January 9, 2023

In December, the Government pushed back their plans for Making Tax Digital for Income Tax Self Assessment – here’s what you need to know.

It’s becoming increasingly difficult to ignore the fact that we’re living in a digital world. Whether you use Apple Pay on a daily basis, have an Amazon Alexa virtual assistant in your home, or even just take pictures on your phone – there’s no denying that everyday life has become unprecedentedly digitalised in the past 15 years. Now, we’re in the midst of the government’s Making Tax Digital (MTD) campaign, which hopes to make it easier for businesses to avoid mistakes when filing their taxes through the use of digital records and online software. 

You’re probably well aware that MTD for VAT is already in full swing, and has been in progress since 2018. On 4th January 2023, any VAT registered businesses who hadn’t yet signed up for MTD for VAT were automatically signed up for it by HMRC. This came after plans for MTD for Income Tax Self Assessment (ITSA) were delayed in December, with the government introducing plans for gradual implementation. 

In a statement from Victoria Atkins, Financial Secretary to the Treasury, HMRC explained how, ‘Making Tax Digital (MTD) for VAT is already demonstrating the benefits to businesses that digital ways of working can bring.’ Although the government is keen to roll out MTD for ITSA, they acknowledge how the current challenging economic environment might make this more difficult. As a result, there will be a gradual rollout of MTD for ITSA, to give more preparation time so that businesses, self-employed individuals and landlords can adapt to the new ways of working.

So when will Income Tax Self Assessment be made digital?

The mandation of MTD for ITSA will be rolled out from April 2026, when businesses, self-employed individuals, and landlords with income over £50,000 will be required to keep digital records and use MTD-compatible software to submit updates to HMRC. Following this, those with an income over £30,000 will then be required to do the same from April 2027. 

The government has committed to reviewing the needs of smaller businesses – especially those under the £30,000 threshold. They will analyse how the MTD for ITSA service can be made suitable for smaller businesses, and how it will be best for them to fulfil their Self Assessments. Once this is clear, we can expect to receive further instruction on how the government plans to standardise digitalised ITSA for all. 

If you have any further questions about MTD for VAT or ITSA, then please don’t hesitate to get in touch with Chris Barlow:

[email protected]

+44 (0) 1 942 816 512

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