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News and events from TaxCalc

Dean Shepherd (11)
20 December 2022

MTD for ITSA Delayed Until 2026

MTD for ITSA delayed until 2026

In a statement made by the Financial Secretary to the Treasury, Victoria Atkins MP, the timetable for Making Tax Digital for Income Tax Self Assessment will once again be delayed.

The mandation of MTD for ITSA is now planned to be introduced from April 2026, with businesses, self-employed individuals, and landlords with income over £50,000 mandated to join first.

An increase in the income threshold from £10,000 to £50,000 is universally welcome, although many continue to question why this is not aligned with the £85,000 VAT threshold or indeed restricted to VAT registered individuals only. For some, the relaxation of the rules do not go far enough to give this programme a fighting chance of success in April 2026 and we may yet be having the same expectation of delay two years from now.

The new £50,000 threshold is only a temporary reprieve. This will be reduced to £30,000 from April 2027 with those below that threshold being kept under review.

Also under review is the fate of partnerships whose inclusion has been deferred from April 2025 to an as yet unknown future date.

The minister also confirmed that the new MTD penalty regime, coming into force for VAT from 1 January 2023, will come into effect from April 2026 for those falling within MTD for ITSA. The Government will also look to apply this same penalty regime to all income tax payers, including those falling outside of MTD for ITSA, although no implementation date was stated for this.

Conspicuous by its absence was any mention of basis period reform and the planned change from the current year basis of taxation to the tax year basis with effect from 6 April 2024. With the transitional year only three months away, it seems that we shall be left with this significant procedural burden that was brought in only to resolve HMRC’s inability to correctly account for basis periods within their MTD for ITSA framework.

Indeed, if we are to see a new Government in office before April 2026 then, rather than witness the long-awaited “death of the tax return” as announced by former Chancellor George Osborne, we may yet see a subsequent Chancellor announce the death of MTD for ITSA which will, certainly in accountancy circles, be widely revered.

Full ministerial statement available here: Written statements - Written questions, answers and statements - UK Parliament  .

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NPA Accountancy (1 month ago)

Thanks for your take on the shambles. We have been predicting this "delay" so luckily haven't forced our clients down the route.

Like you we are concerned they haven't yet mentioned Basis period reform, lets hope someone has a "think" about its implications and the immoral extra burden it could place on some small business.

I also suspect a government change could see the death of MTD - lets hope "the others" put that in their manifesto (& then we can all badger our MP's)
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