Introduction
HM Revenue & Customs (HMRC) has finalized its updated roadmap for the expansion of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). The initiative is designed to transition small businesses and property owners away from traditional paperwork into an automated, software-backed digital reporting system.
The Two-Phase Rollout Schedule
The mandatory digital reporting rules will be introduced sequentially based on qualifying income thresholds:
- Phase 1 (April 2026): Mandated for all sole traders and landlords with a qualifying gross business or property income exceeding £50,000.
- Phase 2 (April 2027): Expanded to include individuals with a qualifying gross income exceeding £30,000.
What Compliance Requires
Taxpayers falling within these brackets will no longer be permitted to rely solely on annual spreadsheets or paper records. Affected individuals are legally required to:
- Keep digital transaction records using compatible accounting software.
- Provide digital, cumulative updates to HMRC every quarter.
- Submit their final end-of-year tax information directly through an MTD-compliant interface.
Exemptions and Support Infrastructure
HMRC has confirmed that digital exemptions will mirror the rules currently used for MTD for VAT. Taxpayers who are digitally excluded due to location, disability, or age can apply for exemptions via phone or in writing. For those making the transition, HMRC is collaborating with the tech sector to ensure affordable and free-to-use software options are available for simpler tax affairs.
If you are interested to learn more
Feel free to contact us on the below to ensure you are complying today.
0203 4688 788
info@npus.co.uk
