Making Tax Digital - Income Tax Self Assessment (MTD - ITSA)

Making Tax Digital for ITSA is for the Self Employed and Landlords who earn over £30,000 a year

What is MTD?

Making Tax Digital for Income Tax (MTD ITSA) will be a modernised way of reporting your earnings to HMRC. The new MTD rules will mean you will need to use compliant software such as QuickBooks to keep your records digitally and to send Income Tax updates to HMRC instead of filing a Self Assessment tax return.

You will need to send quarterly updates of your income and expenses to HMRC using MTD compliant software such as QuickBooks or Xero. Then at the end of the tax year you need to send a final declaration confirming the businesses' income, this will replace the Self Assessment Tax return.

What are the benefits of MTD and why are thousands already on board?

Here are some key points from HMRC:

• It’s easier to keep on top of your tax affairs
• You can see real time data on your business finances
• Errors are greatly reduced, which in turn increases confidence in managing your tax affairs
• Time saving, meaning less time spent on admin, providing businesses with more time to maximise business opportunities and growth
• You are on top of your cashflow, which helps to budget better and ultimately become more profitable

All business owners are cautious of anything that is going to cost them more money so what are the potential costs involved with MTD for ITSA?

We have listed a few below:

• Purchasing or upgrading software to ensure you are MTD compliant
• Initial outlay of time in getting to know the new legislation and quarterly reporting
• Training on new software
• Monthly costs of software subscriptions (there are however free versions)

Whatever stage you are at with MTD, be it you haven’t even started thinking about it or perhaps you already have the MTD compliant software (like QuickBooks) but you haven’t quite got your head round it, we can jump in and lend you a hand.