HMRC has changed the way businesses can sign up for the Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) pilot. Who can join and what steps are required?
MTD ITSA recap. The next phase in HMRC’s grand plan to make tax digital is to join up unincorporated businesses (sole traders and partnerships) plus landlords whose property income exceeds £10,000 per annum. The mandatory start date for these groups was recently deferred until 5 April 2024. However, businesses or landlords that wish to acclimatise themselves to Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) before they have it imposed on them can join HMRC’s pilot scheme.
Signing up
Other than the requirements mentioned above the only condition is that your business or property rental business must use MTD ITSA-approved bookkeeping software (see The next step ).
Tip. Since 9 December 2021 to sign up to the pilot you must go through the company whose bookkeeping software you use. Alternatively, you can ask your accountant to sign up for you. The former method won’t cost you any accountant’s fees and there will be no charge from the software provider. If you’re already using the pilot, the change of procedure won’t affect you and you can continue using it.
More information to come
HMRC will be publishing more detail in early 2022 and this will identify when other types of self-assessment taxpayer will be eligible to join. We’ll keep you informed of any changes.
After joining
The key changes in your tax arrangements after joining the MTD ITSA pilot are that you will be required to:
- send quarterly reports of your business records to HMRC
- submit a final declaration and pay the tax you owe by 31 January of the following year
- submit a self-assessment tax return as usual.
If you want to join HMRC’s MTD ITSA pilot scheme you can now only do so by asking your bookkeeping software provider. Alternatively, you can ask your accountant but they may charge for their time.
The Next Step
HMRC’s MTD ITSA pilot website including a list of approved software.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.