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Making Tax Digital for ITSA Postponed Until April 2026

Making Tax Digital for ITSA Postponed Until April 2026

Esme Shakeshaft

Making Tax Digital (MTD), the initiative from HMRC that aims to digitise the tax system was set to be mandatory for Income Tax from April 2024, but recent announcements show that making tax digital for ITSA will be postponed until April 2026.

MTD for Income Tax Self-Assessment (ITSA) had been set to impact sole traders and landlords that had gross income over £10,000 with effect from April 2024, requiring them to comply with the new legislation, regardless of when their accounting period ended. 

It has now been announced that MTD for ITSA will be phased in from April 2026, with landlords and self employed businesses with over £50,000 impacted first. Those that earn between £30,000 - £50,000 will be phased in from April 2027, however most individuals are able to register for MTD for ITSA before-hand if they wish to do so.

A statement from the Financial Secretary to the Treasury Victora Atkins on 19th December 2022 said, when confirming the changes that to maximise the benefits of MTD for small businesses, it would give those "particularly with the smallest incomes, more time to adopt to the new ways of working."

The statement includes the following:
  • The first businesses, individuals and landlords required to join MTD for ITSA will be those with income over £50,000 from April 2026
  • Those with income between £30,000- £50,000 will then be required to join MTD for ITSA from April 2027
  • A review of those with income of £30,000 and below will now be performed to review their needs so that they can be assisted with fulfilling their Income Tax obligations; any further mandation of MTD for ITSA will be set out once this is complete
  • Extension for MTD for ITSA for general partnerships will not take place as previously planned in 2025 (although commitment to this at a later date remains)
  • Points-based penalty system to link penalties for late submission and late payment will come into effect when they a required to join MTD for ITSA.
Government anticipates early sign-up will be possible. 

The statement is available to read in full.

HMRC believes that the next phase of MTD for ITSA (which impacts sole traders, the self employed and landlords) should help with recovering the £32bn the taxman believes is underpaid each year.

To find out more information on Making Tax Digital for ITSA and how it can impact you from April 2026 onwards, then please visit our MTD for ITSA hub.