HMRC will launch a campaign this month to inform taxpayers about Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA).
Initially, HMRC is contacting sole traders and landlords with earnings over £50,000, informing them of the upcoming MTD for ITSA requirements. Partnerships and limited companies will be included in the MTD for ITSA initiative at a later date.
What is MTD for ITSA?
Under MTD for ITSA, affected taxpayers will need to meet additional reporting obligations alongside the traditional Self Assessment tax return. Businesses and landlords will be required to:
- Keep digital records of income and expenses using MTD-compatible software
- Submit quarterly updates to HMRC detailing their earnings
- File an end-of-year declaration to confirm final tax calculations
What information is included in HMRC’s MTD for ITSA letter?
If your 2023/24 Self Assessment tax return indicates total income of £50,000 or more, you should receive a letter from HMRC. This letter outlines:
- The new MTD for ITSA requirements
- The process for year-end submissions
- Available support and resources
- Potential penalties for non-compliance
What software will you need to prepare for MTD?
To comply with MTD for ITSA, you’ll need software compatible with HMRC’s systems. There are already several options available, including free software. It’s important to select a solution that fits your business needs. You can find a list of compatible software on the Gov.uk website.
How can you prepare?
- Choose MTD-compatible software that suits your business
- Understand your quarterly reporting obligations
- Start keeping digital records now
- Review your business structure
- Seek professional advice
For more details, check out our recent blog on preparing for MTD for ITSA.
How can PM+M help?
If you’ve received a letter from HMRC—don’t worry! Our MTD specialists can guide you through the changes, from selecting the right software to ensuring compliance with digital reporting.
Get in touch with us at enquiries@pmm.co.uk to ensure you’re fully prepared.
