• Tax Returns • Accounts • Tax Planning • Wills & Probate • Statutory Audit • Business Health Checks • Company Secretarial Work • Making Tax Digital (MTD) • Research & Development (R&D) • Inheritance Tax Planning (IHT) •
Looking for a local accountant? To arrange your complimentary initial meeting please call our West Malling branch on 01732 870032 or find us at 19-21 Swan Street
perrysaccountants.co.uk
Perrys West Malling, 19-21 Swan Street, West Malling, ME19 6JU
Making Tax Digital for Income Tax (MTD IT): How will it affect you?
Are you self-employed or a landlord? MTD IT may affect you from April 2026.
Michelle from our West Malling branch explains MTD IT and what you need to do.
What is MTD? HMRC has a vision to digitalise the tax system covering VAT, Income Tax and Corporation Tax. With MTD VAT already in motion, HMRC’s next plan is to focus on MTD for Income Tax.
Who will be affected? MTD IT will affect self-employed and landlords who report income (turnover) from self-employment and/or property, which exceeds £50,000 on their 2024/25 self-assessment tax returns. Meeting this criteria will in turn require the individual to be MTD IT compliant by April 2026. The income limit is reduced to £30,000 for 2025/26 and £20,000 for 2026/27 with MTD submissions being required from April 2027 and April 2028 respectively. Anyone below these limits is not required to sign up to MTD IT, but can do so voluntarily.
What counts as qualifying income? Qualifying income is your turnover or rental income before deducting expenses and does not include income such as employment, dividends or savings. You may have income from more than one source such as self-employment and rental income, so you should combine the turnover and rental income to calculate your combined qualifying income. Individuals with foreign self-employment or properties will need to consider residency and domicile rules to determine the qualifying income.
What is MTD IT, and if my qualifying income exceeds the limits, how will that affect me? MTD IT requires an individual to record their business transactions using digital records, with the most convenient method being online accounting software.
HMRC requires MTD compatible reports to be submitted every 3 months, however you can do this more frequently if you wish. The accounting software will generate figures based on the information you have entered to record your daily business activity and create an MTD IT report. You will be able to submit the report using the online software and HMRC will provide an estimate for your tax liability.
Tax payments are not required after each quarterly submission and will be due the same time as the current self-assessment scheme. It is also possible to use spreadsheets, however, it will be necessary to use MTD IT compatible bridging software to ensure the figures are reported in the correct format and contain digital links to satisfy MTD compatibility.
Once the 4 quarters have been completed the last submission is your final declaration. The final declaration will include any final year-end adjustments to your self-employment or rental income and you also declare any other reportable income or reliefs you normally declare on your self-assessment return. The deadline for submission is 31 January after the end of the tax year and this is when any tax will be due for payment to HMRC.
MTD IT is imminent - what can I do now to make sure I am ready? It is important to make sure you have registered for MTD and make the necessary changes to your software during the transition period. This will allow you to become comfortable with the process before HMRC look to introduce penalties for late submissions.
Currently there is no date set for MTD to be applied to partnerships or limited companies but HMRC do have this in their long term plan.
For our full MTD IT guide or to find more information on MTD IT please go to: perrysaccountants.co.uk/making-tax-digital
If you would like us to help you with MTD or if you have any questions, then please email us at MTD@perry-company.co.uk or contact Michelle at the West Malling branch on 01732 870032.
For your complimentary initial consultation contact one of our branches quoting: PERRYSKH