Sole traders and individual landlords have an additional two years to prepare for the new reporting requirements under Making Tax Digital for Income Tax Self-Assessment (MTD ITSA), which is now due to come into effect from 6 April 2026.
Those with small levels of sales have even longer to prepare, as the turnover threshold for entering the MTD ITSA regime for sole traders and individual landlords will be set at £50,000. This turnover threshold will be reduced to £30,000 from 6 April 2027.
The government has said it will commence a review into how the MTD ITSA service can be shaped to meet the needs of smaller businesses and to look at the best way for them to fulfil their Income Tax obligations. Only when that review is complete, and after consultation with businesses, tax agents and others, will the government set out plans for any further mandating of MTD ITSA beyond 2027.
No date has been set for the expansion of MTD ITSA to partnerships of any type. The expansion of MTD to corporation tax now seems to be a very distant ambition.
However, there is some bad news – all unincorporated businesses, including partnerships, will be forced to report profits on the tax year basis from April 2024. Around one third of businesses that are affected by the shift to the tax year basis are partnerships. Limited liability partnerships (LLPs) are similarly affected.
If your business uses an accounting period which does not end from 31 March to 5 April, there will be some complicated calculations to undertake for 2023/24. We can help you with this.
