From 6 April 2024, MTD for income tax self-assessment (MTD for ITSA) will require unincorporated businesses, self-employed people and landlords (with turnover over £10,000) to:
- keep income and expense records digitally;
- make quarterly reports of income and expenses to HMRC through software or an app within one month of the end of the quarter; and
- submit an end of year declaration to HMRC through their digital tax account by 31 January following the end of the tax year;
Please note,
The £10,000 limit applies to gross income or turnover, not profit. It applies to the total gross income where the individual has more than one trade or property business. For example, if the individual has £6,000 of rental income and £7,000 of sales from a sole trader business, they will exceed the limit and be in MTD scope. Joint landlords must comply with MTD for ITSA where their share of the income exceeds £10,000. Each taxpayer must keep records of their share of income and expenses. For example, if a property is joint 50/50, each taxpayer must keep records for 50% of the total income and expenses. Buy-to-let landlords, Furnished Holiday Lettings, non-UK property, and commercial property all fall within the scope of MTD for ITSA. Once an individual is mandated into MTD for ITSA, they will only become exempt if their qualifying income falls below £10,000 for three consecutive tax years (based on filed tax returns).Submission to HMRC
Individuals with secondary income of more than a certain threshold from self-employment or property will use their personal tax account to tell HMRC when things change and will no longer be required to complete tax returns at the end of the year; MTD draft legislation confirms that landlords and sole traders who must join MTD from April 2024 but are under the VAT threshold, will only have to submit three line accounts to HMRC. Those who are over the VAT threshold (£85,000) will have to submit income and expenses by category with property income split between UK and overseas, Furnished Holiday Let and other types of letting, and FHL’s split between UK and EEA holiday let businesses. Quarterly updates must be submitted to HMRC, with everyone adhering to the following quarter dates:Quarter Period Deadline
1 6 April – 5 July 5th August
2 6 July – 5 October 5th November
3 6 October – 5 January 5th February
4 6 January – 5 April 5th May
