MTD for Self Assessments: Changes Starting from April 2025 for Those Earning Over £50K
From April 2025, HMRC’s Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) will become mandatory for self-employed individuals and landlords with an annual turnover exceeding £50,000 in the previous tax year. This significant shift aims to streamline tax reporting and enhance accuracy while reducing the risk of errors.
What Is Making Tax Digital (MTD)?
MTD is an HMRC initiative designed to modernise the UK tax system by requiring taxpayers to maintain digital records and submit tax returns electronically through compatible software.
Who Will Be Affected from April 2025?
- Self-employed individuals earning more than £50,000 annually
- Landlords with rental income exceeding £50,000 per year
If your turnover was below £50,000 but above £30,000, you will need to comply with MTD for ITSA from April 2026.
Key Changes Under MTD for ITSA
- Digital Record-Keeping – You must maintain accurate digital records of your income and expenses using HMRC-approved software.
- Quarterly Updates – Instead of a single Self Assessment tax return, you’ll need to submit updates to HMRC every three months.
- End-of-Period Statement (EOPS) – At the end of the tax year, you’ll confirm final figures, ensuring accuracy before submitting the final declaration.
- Final Declaration – Similar to the current Self Assessment, this will be your official tax submission, replacing the annual return.
What Software Can Be Used for MTD?
HMRC requires the use of compatible accounting software, such as:
- QuickBooks
- Xero
- FreeAgent
- Sage
- HMRC-approved bridging software for spreadsheets
Benefits of MTD for Self Assessment
- Greater accuracy in tax reporting
- Real-time tracking of income and expenses
- Reduced risk of penalties due to fewer errors
- Improved financial management with quarterly insights
How to Prepare for MTD by April 2025
- Check if you meet the £50,000 threshold based on your latest Self Assessment.
- Choose and set up MTD-compatible software before the deadline.
- Start maintaining digital records to familiarise yourself with the process.
- Consult a tax professional for guidance on compliance and software selection.
Non-Compliance Consequences
Failure to comply with MTD for ITSA can lead to penalties, including fines for late or inaccurate filings. Ensuring timely compliance will help avoid unnecessary costs and stress.
Get Expert Help with MTD for ITSA
At Eclat Accountancy, we help self-employed individuals and landlords transition smoothly to MTD. Our team provides expert advice on software selection, tax compliance, and efficient digital record-keeping.
Final Thoughts With the April 2025 deadline fast approaching, it’s essential to prepare for MTD if your turnover exceeds £50,000. Transitioning early can ensure compliance, prevent penalties, and make tax management easier.
Need assistance? Contact Eclat Accountancy today for expert MTD guidance!
