MTD for Income Tax
Making Tax Digital for Income Tax, aims to transform tax administration to make it more efficient, effective and easier for taxpayers.
MTD for Income Tax is being introduced in phases, based on qualifying income from self-employment and property, with lower thresholds applying in later phases.
Who must comply with MTD for IT
MTD for Income Tax will roll out in stages, giving taxpayers and agents time to prepare for the new digital reporting requirements. Initially, the rules apply to those above the higher thresholds. They will then extend to smaller businesses and landlords in later phases. As a result, the phased introduction should support a smoother transition to digital record-keeping and quarterly reporting.
Qualifying income generally means gross income from self-employment and rental or property income, measured before expenses. If the combined total exceeds the threshold, you will fall within the rules. Even if your income drops.
Who must comply with MTD for IT
MTD for IT applies to individuals within Self-Assessment who receive gross income from self-employment and/or property. The requirement is based on total gross income, not profit.
If your combined gross income from these sources exceeds the relevant threshold, you must comply with MTD and submit quarterly updates to HMRC using compatible software.
Where you operate more than one business or have multiple rental properties, the gross income from all sources is combined to determine whether the rules apply.
Deadlines for submitting quarterly updates are consistent for everyone under MTD rules. From the start of the tax year on 6th April, the deadlines are:
– August 5th
– November 5th
– February 5th
– May 5th
Quarterly updates are due one month after each quarter ends. Additionally, income tax payment dates remain unchanged.
At the end of the tax year, you’ll need to finalize your business income by completing an end-of-period statement (EOPS) for each source of income and a final declaration that replaces the current Self-Assessment tax return.
