The UK government’s Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) initiative is set to go live from April 2025. This new system will change how self-employed individuals and landlords report their income tax, requiring them to keep digital records and submit tax updates through HMRC-approved software.
Who Needs to Comply with MTD for Self-Assessment in April 2025?
From April 2025, MTD for ITSA will apply to self-employed individuals and landlords with an annual turnover exceeding £50,000.
From April 2026, the threshold will lower to £30,000, bringing more taxpayers into the system.
Key Changes Under MTD for Self-Assessment
1. Digital Record-Keeping
- Taxpayers must use compatible software to maintain income and expense records.
- Spreadsheets alone will no longer be sufficient unless linked to bridging software.
2. Quarterly Tax Reporting
- Instead of a single annual tax return, businesses and landlords must submit quarterly updates (every 3 months) to HMRC.
- Deadlines for quarterly updates are expected to be 5 August, 5 November, 5 February, and 5 May.
3. End-of-Year Submission
- An annual Final Declaration (replacing the Self-Assessment return) must be submitted by 31 January following the tax year.
- This will confirm total earnings and tax owed.
Benefits of MTD for Self-Assessment
- Improved Tax Accuracy – Reduces errors from manual tax calculations.
- Better Financial Visibility – Regular updates help taxpayers manage cash flow.
- More Efficient Process – Digital submissions streamline tax reporting.
How to Prepare for MTD for Self-Assessment
1. Check If You’re Affected
If your turnover exceeded £50,000 in the previous tax year, you will need to comply with MTD for ITSA from April 2025.
2. Choose MTD-Compatible Software
HMRC-approved software options include:
- Xero
- QuickBooks
- FreeAgent
- Sage
- TaxCalc
3. Maintain Digital Records
Start keeping digital records of your income and expenses to prepare for quarterly submissions.
4. Seek Professional Guidance
Accountants can help businesses transition smoothly to the new system and ensure compliance.
Get Expert Help with MTD Compliance
At Eclat Accountancy, we assist self-employed individuals and landlords with:
- MTD-compliant bookkeeping solutions
- Tax planning and digital record-keeping
- Software selection and setup
Final Thoughts With the April 2025 deadline approaching, now is the time to get ready for Making Tax Digital for Self-Assessment. Ensure compliance and avoid penalties by adopting digital tax reporting early.
For expert guidance on MTD, contact Eclat Accountancy today!
