Making Tax Digital for ITSA has been delayed, but we’re ready to support you

This article was updated on Thursday 21 December 2023.

HMRC has announced that Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) has been delayed until April 2026. With small businesses, accountants and bookkeepers facing challenging times, we understand and support the delay from HMRC – giving you more time to prepare. 

From this date, landlords and self-employed people earning above £50,000 annually will need to comply with MTD rules. Those earning income over £30,000 will come into MTD from April 2027. This means sending quarterly updates to HMRC via MTD-compatible software, as well as a Final Declaration once a year. 

The delay, however, doesn’t change how we are approaching the upcoming legislation. 

We will continue to enhance our MTD for ITSA offering to deliver the best user experience possible, and provide guidance to the accounting partners and small business customers who need our support in preparing for the future of digital tax. 

Why has this happened?

With businesses and their advisors facing a period of unprecedented disruption, the delay to MTD for ITSA is HMRC’s bid to ensure it’s as simple as possible for businesses to migrate. This can only be a good thing, because regardless of this delay, it remains a vital part of the Government’s journey to digitise the tax process.

All businesses will need to keep digital records in the future – and while this change may feel overwhelming to those affected, it does promise serious benefits in the long run. 

From optimising onerous, time-consuming tasks, to improving the efficiency and accuracy of the tax process, small businesses, accountants and bookkeepers should be able to look to the future with optimism. And even if MTD for ITSA is a little further down the road than expected, it’s never too early to get your ducks in a row by adopting compatible accounting software. 

And more broadly, by empowering small businesses to adopt digital tools, they can better prepare themselves for the challenges ahead. For example, a huge number of small businesses are facing cash flow crunch – when expenses in a given month exceed revenue. Digital tools can help small businesses better monitor expenses and get paid more quickly – vital aspects of managing cash flow. 

The new MTD for ITSA timeline

Here are the key dates you need to know when preparing for MTD for ITSA: 

• Apr 2026: MTD for ITSA – businesses, self-employed individuals, and landlords with income over £50,000.
• Apr 2027: MTD for ITSA -businesses, self-employed individuals, and landlords with income over £30,000.
• Not yet timelined:
  • MTD for ITSA for those with income under £30,000 annually
  • MTD for ITSA for general partnerships

We’ll continue to work closely with HMRC to support MTD for ITSA as it evolves, and also support MTD for Corporation Tax when it becomes mandated. But most importantly, we’re committed and ready to provide you with a solution to meet clients’ future filing needs, and make this journey as smooth as possible. 

To find out more about the legislation and how Xero can help your clients comply, check out some of our MTD for ITSA resources.