This next stage is known as Making Tax Digital for Income Tax Self Assessment (MTD for ITSA).
The next stage: MTD for ITSA
Requirements for sole traders and landlords within these thresholds are as follows:
- MTD software: Individuals need to use compatible, HMRC-recognised MTD software to keep digital records and file MTD for ITSA returns.
- Maintain digital records: those affected will be required by law to maintain digital records.
- April 2019: VAT-registered businesses with turnover above the £85,000 VAT registration threshold must retain digital records and submit their VAT returns to HMRC using 'functional compatible software' such as Xero.
- April 2021: 'Digital links' between software programs, applications or products must be in place for all VAT-registered businesses.
- April 2022: VAT-registered businesses with turnover below £85,000 must retain digital records and submit their VAT returns to HMRC using 'functional compatible software' such as Xero.
- April 2026: Sole traders and landlords with turnover above £50,000 must submit quarterly updates, as well as annual submissions, to HMRC.
- April 2027: Sole traders and landlords with turnover above £30,000 must submit quarterly updates, as well as annual submissions, to HMRC.
- TBC: The ITSA deadline for partnerships and those earning below £30,000 annually is yet to be confirmed. The same is true for MTD for corporation tax. We'll report back as soon as we have an update.
MTD for ITSA: Communications toolkit
Get your practice and clients ready for Making Tax Digital for ITSA using this simple guide