Starting on the 6th of April 2024, Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) applies to all self-employed businesses and landlords with a business and/or property income greater than £10,000 per year ...
If your bookkeeping and accounting software isn't Making Tax Digital ready then you'll need to either upgrade or swap to another system!
HMRC has published guidance on this so if you fall within the scope of Making Tax Digital for Income Tax Self-Assessment then it is very important that you understand what you need to do to comply. It all starts with some key dates.
"MTD for ITSA will apply for tax year 2024/25 and onwards!"
Under MTD for ITSA, you must send HMRC quarterly updates within a month of each quarter's end. You also have to send an end-of-period statement by the 31st of January following the end of the tax year and make a final declaration by the same date. This would be the 31st of January 2026 for the 2024/25 tax year.
You must first choose MTD-compatible software for your bookkeeping and accounting. It must work with MTD for ITSA and be capable of:
creating and storing digital records of all your business transactions
sending updates of your total business income and total business expenses to HMRC each quarter
making an end-of-period statement
If you have more than one business or are, for example, both a self-employed trader and a landlord, you should keep separate records for both and make separate submissions for each of them.
Your software needs to be authorised to make submissions to HMRC and all of the main software providers will let you know how to do this. Of course, Essendon can get this set up for you and/or make the submissions on your behalf.
The quarters will run until the 5th of July, the 5th of October, the 5th of January and the 5th of April each year. Submissions must be made within a month of the end of a quarter. You can change the updates to submit at the end of a calendar quarter if you prefer. If you miss the deadline, you may be charged a penalty.
At the end of the actual tax year, you'll need to make an end-of-period statement via MTD for ITSA. Doing this means you can also:
make accounting adjustments
make tax adjustments
claim reliefs or allowances
The end-of-period statement is where you declare that the information you have provided is complete and correct and that you have finalised your tax position for that tax year.
"This must be submitted by the subsequent 31st of January!"
If your bookkeeping and accounting software isn't Making Tax Digital ready then you'll need to either upgrade or swap to another system as soon as you can to ensure you're ready for MTD for ITSA to start.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about Making Tax Digital for Income Tax Self-Assessment, it may be a great idea to call me on 01908 774320 and let's see how I can help you.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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