Making tax digital is a part of the government’s tax administration strategy, helping to reduce the tax gap by: keeping digital records, using software that works with the making tax digital scheme (MTD) and, submitting updates every quarter.

Supporting the HMRC’s plans to digitalise the tax system, making tax digital will make it easier for individuals and people to get their tax right. It means customers can integrate their tax management through software and boost business productivity. Whilst doing this, MTD will also help reduce the amount of tax lost thanks to the improved accuracy of digital records, additional help built into software products and digital records being sent directly to HMRC.

Making tax digital for income tax self-assessment (ITSA) was originally planned to be rolled out from April 2024 however, this has been deferred to April 2026. This means there is an additional two years to prepare as the government says it understands that self-employed sole traders and landlords in the UK are currently facing a “challenging economic environment”.

Who will this affect?

The delayed rollout of MTD for ITSA will affect those who are self employed, landlords and partnerships. As well as the later introduction, the government have also changed the income threshold. Originally, MTD for ITSA affected sole traders and landlords who earn upwards of £10,000. However, from April 2026 only sole traders and landlords who have a taxable income of more than £50,000 will need to keep digital records and provide quarterly updates via MTD compatible software. Those who earn an income between £30,000 and £50,000 must do the same from April 2027.

What to do if MTD ITSA applies to you

At Cooper Accounting, we planned on addressing MTD from this April (2023) with all of our customers that it applies to however, despite the deadline being delayed two years, we still think it is a great opportunity to embrace cloud accounting. We still recommend starting your MTD journey as cloud accounting software allows you to keep records and understand more about your finances. Fewer mistakes will be made as human error is eliminated and you will need to spend time managing your bookkeeping.

As a gold partner of Xero, we are offering a discount for those who take on a new license, all of which have a variety of options to suit everyone. Our customers are able to get a 50% discount between now and the 30th of September 2023. Available anywhere at anytime, with Xero you’re able to access your accounts from your desktop or mobile app, allowing you to manage your finances even more easily.

If you would like to begin your journey with MTD, please reach out to the team and we’ll be more than happy to help.