MTD for ITSA delayed until April 2026

The government has announced that Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), which will represent a change to how self-employment and property income is reported, will now be phased in from April 2026, rather than April 2024.

The government said that understanding that self-employed individuals and landlords are currently facing a “challenging economic environment”, and the transition to Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) representing a “significant change to taxpayers and HMRC” for how self-employment and property income is reported, the government is giving a longer period to prepare for MTD.

From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software.

Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most customers will be able to join voluntarily beforehand meaning they can eliminate common errors and save time managing their tax affairs.

The government has also announced a review into the needs of smaller businesses, and particularly those under the £30,000 income threshold. The review will consider how MTD for ITSA can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations. It will also inform the approach for any further roll out of MTD for ITSA after April 2027.

It also revealed that mandation of MTD for ITSA will not be extended to general partnerships in 2025 as previously announced. The government remains committed to introducing MTD for ITSA to partnerships in line with its vision set out in the government’s tax administration strategy.

Victoria Atkins, Financial Secretary to the Treasury, said: “It is right to take the time to work together to maximise the benefits of Making Tax Digital for small businesses by implementing the change gradually. It is important to ensure this works for everyone: taxpayers, tax agents, software developers, as well as HMRC.

“Smaller businesses in particular should be able to experience the benefits of increased digitalisation of Income Tax in a way which meets their needs. That is why we are also today announcing a review to establish the best way to achieve this.”

Commenting on the news, Toby Tallon, tax partner at Evelyn Partners, added: “This latest postponement to MTD, which had closing the ‘tax gap’ as a primary aim, has been called for and anticipated. However, in the context of increased pressure on the Treasury to reduce the UK’s deficit, the delay is particularly awkward.”