The Treasury has confirmed a two-year delay to the introduction of Making Tax Digital for income tax (MTD ITSA).
Following calls from numerous professional bodies such as the ICAEW, the Treasury has finally taken notice and delayed the introduction of MTD ITSA, much to the relief of many professionals. This delay is the fifth deferral and as quoted by the ICAEW “an opportunity to get it right”.
Victoria Atkins, financial secretary to the Treasury issued a ministerial statement outlining the changes which in summary are:
A two-year delay until April 2026 for mandatory MTD ITSA filing.
The minimum income reporting level increased to £50,000, with those earning more than £30,000 mandated to join the scheme in 2027.
The situation for landlords and sole traders earning less than £30,000 will be reviewed to see if MTD ITSA can be shaped to meet the needs of smaller businesses.
Partnerships will not be brought into MTD for ITSA as previously planned in 2025.
Points-based penalty system to be extended to MTD ITSA filers when they join.
In the current challenging economic environment, it will be a welcome relief to taxpayers and their agents that MTD ITSA has been delayed. MTD ITSA presents a significant change in the way people manage and report Income Tax and businesses need time to adapt to the new ways of working.
The Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) welcomed the announcement stating “This announcement recognises reality. The incredibly limited testing, combined with significant problems still to be resolved, means that this delay had to happen.”
Whilst the delay is welcomed, we would urge taxpayers to get ready for the changes earlier rather than later. For some, it will be a big change in their processes so this two-year reprieve gives taxpayers to chance to implement changes gradually and ensure they are right. There are so many options and ways that accountants such as ourselves can assist. Whether this be helping you to get your processes in place, or utilising our outsourcing services to manage the process for you, we would strongly recommend adopting new technologies and processes to prepare for the change.
If you would like to talk to us about getting ready for MTD ITSA or our outsourcing services, then please do get in touch.
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