The UK government is introducing Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) to modernize and simplify the tax system for sole traders and landlords. The goal is to reduce errors, streamline record-keeping, and ensure compliance with HMRC regulations.

Who Will Be Affected?

• From April 2026: Individuals with an annual business or property income exceeding £50,000.
• From April 2027: Individuals earning over £30,000 annually.

Key Requirements:

1. Digital Record-Keeping:
   • Maintain digital records of all income and expenses using compatible software.
   • Use HMRC-approved software to ensure compliance.
2. Quarterly Reporting:
   • Submit quarterly updates to HMRC, summarizing your income and expenses.
   • Deadlines for quarterly updates are:
     • 5th August (for April to June period)
     • 5th November (for July to September period)
     • 5th February (for October to December period)
     • 5th May (for January to March period)
   • These updates are designed to keep your tax records up to date throughout the year, reducing the workload at the end of the tax year.
3. End of Period Statement (EOPS):
   • At the end of the tax year, submit a final declaration confirming all income and expenses.
   • This is the point where any accounting adjustments or claims for allowances are made.

Benefits of MTD for ITSA:

• Reduced Errors: Digital record-keeping and frequent updates reduce the risk of mistakes.
• Time Efficiency: Regular reporting makes the year-end process smoother and faster.
• Enhanced Financial Control: Keeping your accounts up to date every quarter provides better visibility into your finances.
• Improved Compliance: Stay on top of your tax obligations with automated and organized submissions.

Voluntary Sign-Up:

Eligible individuals can voluntarily sign up for MTD for ITSA before it becomes mandatory. Early adoption can help you get familiar with the system and minimize any disruption.

How BB Accounting Solution Ltd Can Help:

Starting from 6th April 2025, BB Accounting Solution Ltd will be supporting our clients to prepare for MTD for ITSA, ensuring they are fully compliant and ready to avoid late filing penalties. Our comprehensive support will include:

• Setting up digital record-keeping systems by providing MTD-compliant bookkeeping software to make tracking income and expenses straightforward and efficient.
• Ensuring timely and accurate quarterly submissions.
• Providing expert advice on tax efficiency and compliance.
• Regular client updates and reminders to keep you on track with your obligations.

Getting Ready for MTD for ITSA:

• Assess Your Business Income: Determine whether your income meets the mandatory threshold.
• Get the Right Software: We will provide you with MTD-compliant bookkeeping software to simplify your digital record-keeping.
• Plan Your Reporting Schedule: Stay on top of the quarterly update deadlines to ensure compliance.
• Get Professional Support: Let BB Accounting Solution Ltd help you transition smoothly to the new system.

By partnering with BB Accounting Solution Ltd, you can minimize the risk of late filing penalties and ensure your business remains fully compliant with the latest digital tax requirements.

Contact us today to discuss how we can support your business through this transition!