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MTD ITSA
What is changing?
Making Tax Digital for Income Tax is a new way in which sole traders (including CIS workers) and landlords will be required to report their tax records to HMRC.
Individuals will be required to submit quarterly tax submissions, and one final return to HMRC via MTD compliant software.
What does this mean for you?
Making Tax Digital for Income Tax will become mandatory in phases:
When you need to start using Making Tax Digital for Income Tax depends on your qualifying income within a tax year. If your qualifying income is over:
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£50,000 for the 2024 to 2025 tax year, you will need to use it from 6 April 2026
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£30,000 for the 2025 to 2026 tax year, you will need to use it from 6 April 2027
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£20,000 for the 2026 to 2027 tax year, the government has set out plans to introduce legislation to lower the qualifying income threshold from 6 April 2028
Your qualifying income is the total income you get in a tax year from self-employment (including CIS) and rental properties. HMRC will assess your total income before you deduct expenses.
Example
For example, your gross income (income before you deduct expenses) could be:
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£25,000 from rental income
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£27,000 from self-employment income (including CIS income)
In this example, your total qualifying income would be £52,000.
You do not need to start using Making Tax Digital for Income Tax until after you have submitted your first Self-Assessment tax return, but you can choose to sign up early.
If you need to use MTD ITSA, you should prepare and be signed up for the service before you need to use it. For example, you will need to choose and authorise your chosen software or decide how your agent will act for you.
How can NASA help?
Nasa can help you remain compliant, and we partner with MTD compliant software options.
We are pleased to offer the following packages, depending on the level of additional support you may require during the year.
If you’re unsure which option you need, please get in touch and we’ll happily help to match you to a package that best suits your needs:
Essential Package | Premium Package | |
|---|---|---|
Most suited for... | Small and simple sole trader business | Larger or more complex sole trader business |
Managing the process for you to meet all of HMRC deadlines and filings | ✅ | ✅ |
Provision of easy to use business bank account connected MTD software | ✅ | ✅ |
Keeping the process simple and straightforward for your ease | ✅ | ✅ |
Free tax and accounts helpdesk to support and advise you | ✅ | ✅ |
Includes self assessment filing for one or two income streams | ✅ | ✅ |
Automated reminders if you are close to deadlines | ✅ | ✅ |
A more complex self assessment (subject to checks) | ✅ | |
One-to-one support from a dedicated personal account manager | ✅ | |
Bespoke tax planning services | ✅ | |
Quarterly VAT as well as MTD filings where requested | ✅ | |
Additional Bookkeeping services - from business banking / excel | ✅ | |
Add ons available - such as additional employee payroll and CIS300 returns | ✅ |