Give us your details and we’ll be in touch asap

Insights

All Articles

Business Services

Business Tax

Personal tax

Probate and Inheritance Tax

VAT

Business Services  •  Business Tax  •  Personal tax

MTD for ITSA – New Self-Assessment rules for business owners and landlords

By RJP LLP on 13 December 2022

Self-employed business owners and landlords will soon need to comply with MTD (Making Tax Digital) when they submit their tax return. The new system is being implemented in 2024 and is known “Making Tax Digital for Income Tax Self Assessment” (MTD for ITSA).

From April 2024, all sole traders, partnerships and landlords with a total business or property income above £10,000 per year, will have to comply with MTD for ITSA.

To comply with MTD for ITSA taxpayers will need to do the following:

  • Register for MTD for ITSA on the HMRC website;
  • Switch from paper to digital business records only;
  • Use MTD-compatible accounting software for their accounts e.g., FreeAgent, Xero, QuickBooks;
  • Submit quarterly business income and expenses updates to HMRC through their software;
  • Finalise the business’s income in a declaration which confirms that the updates sent are correct, and make any accounting adjustments;
  • Submit the final declaration to HMRC. This will replace the annual self-assessment tax return.

Instead of sending a self-assessment tax return to HMRC once a year; under MTD for ITSA, business owners and landlords will submit a quarterly summary update of their income and expenditure, with a final declaration at the end of the year. It will operate like the current VAT regime.

The quarterly summaries will need to be submitted in line with the businesses’ accounting periods. For example, if accounting periods match the tax year, the four quarters will be:

  • 6th April to 5th July
  • 6th July to 5th October
  • 6th October to 5th January
  • 6th January to 5th April.

MTD for ITSA also requires a “final declaration” to be made to confirm the overall tax position at each year-end. This should include details about personal income and tax reliefs and include an End of Period Statement (EOPS). The final declaration replaces the self-assessment tax return, although the deadline for submission will continue to 31 January.

If you have questions about MTD for ITSA or would like help with property tax, contact us via partners@rjp.co.uk.

Read more articles like this

What is happening to the furnished holiday lettings regime?

General Election 2024: Where do Labour and the Conservatives sit on tax?

Failure to understand tax law costs property owner £25k capital gains tax

What’s your ultimate succession plan?

Basis period reform – the fallout isn’t over yet!

Share this:

All Articles

Business Services

Business Tax

Personal tax

Probate and Inheritance Tax

VAT

Image
Image

60 Day Deadline for CGT Returns and Tax Payments

If you sell a property and incur capital gains tax on the transaction, you will need to file a tax return and also pay any tax that is due within 60 days of completion, or penalties will arise. Need help with your property taxes? Talk to us.