MTD for ITSA delayed until 2026

Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) – the requirement for the likes of landlords and the self-employed to manage their accounts digitally via government-approved software – has yet again been delayed. The initiative was originally scheduled to go ahead in 2018, but has since been pushed back many times and until last month it was planned for April 2024. Yet just before Christmas HMRC announced that it would again be postponed – this time until April 2026 and with a phased approach.

Why has MTD for ITSA been delayed?

The postponement of MTD for ITSA may not come as a huge surprise to some, given that many industry experts, including the Administrative Burdens Advisory Board (ABAB), have been campaigning for a delay over various concerns, such as a lack of thorough testing in its pilot programme.

In its announcement, HMRC stated that the decision to delay the programme and implement a phased approach would give individuals more time to prepare for the change. It also acknowledged the difficult economic climate and the ongoing challenges that both landlords and the self-employed are currently faced with, and the significant changes that MTD for ITSA would bring with it.

HMRC’s Chief Executive and First Permanent Secretary, Jim Harra, commented:

“HMRC remains committed to the delivery of Making Tax Digital as a critical part of our strategy for digitalising and modernising the tax system, but we want to make sure we get this right and deliver it effectively.

“A phased approach to mandating MTD for Income Tax will allow us to work together with our partners to make sure that our self-employed and landlord customers can make the most of the opportunities this will bring.”

You can find out more about the delay via HMRC’s news story.

What is the new phased approach?

The previous MTD for ITSA rules were set to apply to those who earned over £10,000. However, this new phased approach will be more gradual and will allow smaller businesses more time to prepare. This means that only those with an income of over £50,000 will need to be compliant with the new MTD for ITSA regulations by April 2026. For those earning between £30,000-50,000, you’ll need to be compliant by April 2027. The government is said to be reviewing how MTD for ITSA will work for businesses under the £30,000 threshold.

Our advice: don’t delay your MTD plans!

Although this delay will be welcomed by many and is designed to give you more time to get your business ready for MTD for ITSA, we don’t recommend that you ignore it altogether. It’s inevitable that MTD for ITSA will be applicable for the majority of self-employed individuals at some point, so you’ll be saving yourself a lot of stress and hassle if you prepare for it early.

Don’t forget that MTD for ITSA is intended to make accounting easier, more accurate and less stressful. Using MTD-compliant software can help reduce mistakes and simplify and speed up your accounting processes, all of which can save you both time and money in the long run. It really is a worthwhile investment!

If you’d like to learn more, please do take a look at our Making Tax Digital info page and our recommended cloud bookkeeping solutions. You’ll see that we’ve partnered up with various MTD-approved cloud bookkeeping solutions and can therefore provide you with free trials and plenty of information and support, helping you to decide which software will be the best fit for your business. Contact us to find out more.