Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will start to become compulsory from 2024. However, HMRC is encouraging taxpayers to sign up early via their pilot scheme. HMRC have just said that from July 2022, the pilot will be expanded, allowing more individuals to join. Ryan Pearcy, Business Advisory Director looks at who will now be eligible, and the benefits of getting to grips with MTD ITSA sooner rather than later.
From April 2024, MTD ITSA will become compulsory for taxpayers who are self-employed or have property income above £10,000 per year, and the scheme will extend from there to include all taxpayers. Up until now there have been some groups of taxpayers who have been able to sign up early, giving them time to become familiar with the MTD ITSA requirements, such as keeping digital records and sending quarterly updates.
The taxpayers who have been using the pilot scheme have still had to submit a conventional tax return, and until now the eligibility criteria to sign up has been criticised for being quite restrictive. Plus, the number of software providers who are currently compliant with HMRC requirements for MTD ITSA is relatively small. As a result, the numbers joining the pilot have not been high. HMRC has now announced that taxpayers with the following reportable income sources will be able to join from this month:
- UK property
- Gift Aid
- Pay As You Earn income, including pensions
- UK interest
- UK dividends
As is to be expected from HMRC, there are still some exclusions to the pilot scheme. Those with income from other sources, partnerships and with certain charges collected via self-assessment such as High Income Child Benefit charge, will for the moment be excluded from the pilot scheme.
Whilst you may not yet be able to submit the quarterly updates to HMRC, many clients have already seen the business benefits and efficiencies of moving over to digital systems. Plus, the additional management information that digital accounting provides will aid business planning and will enable you and your colleagues to become familiar with the MTD software before the time comes to submit the updates.
If you are confused about how MTD will work for your business, or need help setting up compliant digital systems, then get in touch with the Scrutton Bland team. Our MTD experts will quickly be able to identify all the options available to you and get your business ready for MTD ITSA.
With friendly advice from the SB Digital team, you’ll learn how you would benefit from upgrading your existing software, whether you could use bridging software to link to HMRC or if you need to introduce new systems. And they can even apply to HMRC for an extension if your circumstances merit it.