In the Autumn Budget 2024, the government announced that Making Tax Digital (MTD) for income tax self-assessment will become mandatory for self-employed individuals and landlords.
The changes will come into effect from April 2026 for those with qualifying income over £50,000, April 2027 for those with qualifying income over £30,000 and April 2028 for those with qualifying income over £20,000.
Qualifying income is self-employment income and/or rental income.
HMRC will be sending out letters shortly to those impacted by these changes, but we thought we would give you the heads up.
In summary, the new rules will mean that businesses/landlords who meet the criteria will need to:
· Maintain digital accounting records in a software product or spreadsheet. Maintaining paper records will no longer meet legislative requirements; and
· Submit quarterly updates to HMRC and finalise their tax position after the end of the tax year.
Please note that the quarterly updates are a simple summary of transactions; there will be no requirements to make any tax or accounting adjustments as if they were a full tax return and the quarterly updates will not require a declaration. Inaccuracy penalties will not apply but HMRC may well charge late filing penalties. Tax payment dates are currently unchanged.
As your tax advisers, we will need you to either send us an excel spreadsheet with your transactions or record your transactions on compatible software within 14 days of each quarter beginning April 2026 so we can submit these on your behalf.
If you are using software, then we would recommend Freeagent which is free with a Mettle of NatWest account.
If you have any questions with regards to this then please do not hesitate to contact me.
The changes will come into effect from April 2026 for those with qualifying income over £50,000, April 2027 for those with qualifying income over £30,000 and April 2028 for those with qualifying income over £20,000.
Qualifying income is self-employment income and/or rental income.
HMRC will be sending out letters shortly to those impacted by these changes, but we thought we would give you the heads up.
In summary, the new rules will mean that businesses/landlords who meet the criteria will need to:
· Maintain digital accounting records in a software product or spreadsheet. Maintaining paper records will no longer meet legislative requirements; and
· Submit quarterly updates to HMRC and finalise their tax position after the end of the tax year.
Please note that the quarterly updates are a simple summary of transactions; there will be no requirements to make any tax or accounting adjustments as if they were a full tax return and the quarterly updates will not require a declaration. Inaccuracy penalties will not apply but HMRC may well charge late filing penalties. Tax payment dates are currently unchanged.
As your tax advisers, we will need you to either send us an excel spreadsheet with your transactions or record your transactions on compatible software within 14 days of each quarter beginning April 2026 so we can submit these on your behalf.
If you are using software, then we would recommend Freeagent which is free with a Mettle of NatWest account.
If you have any questions with regards to this then please do not hesitate to contact me.