New reporting regime
Making Tax Digital for Income Tax Self-Assessment is a new way of reporting income and expenses for sole traders and landlords with an income greater than £50,000.
Individuals who fell into this category for 2024-25 will be required to comply with MTD for ITSA from 6 April this year.
From April, 2027, this will be rolled out to include those with income over £30,000.
The new process will replace the Self-Assessment tax returns for affected sole traders and landlords.
It will require the taxpayer or their agent to:
- Keep digital records of business transactions
- Send quarterly updates to HMRC which summarise those business transactions. Separate quarterly updates will be required for UK property, foreign property and each self-employment.
- Provide details of any tax and accounting adjustments and reliefs to finalise taxable income from property and self-employment within a final declaration.
- Provide details of other income sources and other information such as tax allowances and reliefs you wish to utilise that would have previously been included on your self-assessment tax return.
- Confirm the information you have provided is ‘complete’ by making a ‘Final Declaration’ by 31 January the following year.
Software
Individuals within MTD for Income tax will be required to use software to keep their records and submit returns to HMRC.
Partner Karen Lyth said: “There are many different options available, and we can help you choose the right MTD-compatible software tailored to your business needs.
“We understand that change can be difficult. Our team at RNS can help you transition from your existing systems to digital record-keeping, ensuring your financial data is accurate and that you are ready for MTD compliance.
“Alternatively, we can bring your record keeping in-house and manage your submissions on your behalf.”
Require more information?
If you would like more information or would like to speak to us please call on 01724 842713.
Your usual RNS contact can discuss which option is best for you so that everything is in place ahead of the upcoming changes.