MTD for INCOME TAX SELF-ASSESSMENT

The basic requirements of MTD for ITSA are those unincorporated businesses and landlords with turnover over £10,000 a year will be required to:

keep income and expense records digitally;
use MTD-compatible software to submit digital quarterly updates and end of period statements; and
submit a final declaration for each tax year.

The system for paying income tax is unchanged.

The MTD for ITSA provisions applies to:

A person within the charge to income tax, who, not in partnership, carries on (or has carried on) a trade, profession or vocation, a property business or any other activity which may give rise to a charge to income tax as either trading income or property income; but excluding:
the trustees of a charitable trust, or the trustees of an exempt unauthorized unit trust — unless the trustees elect for the MTD for ITSA provisions to apply to them; and
in respect Lloyds underwriting, distributions to shareholders in a real estate investment trust (REIT) and participating in an open-ended investment company which may make property income distributions (together known as excluded activities) — unless the person elects for the MTD for ITSA provisions to apply in respect of these ‘excluded activities’; and
A partnership if one or more of the partners is within the charge to income tax but excluding if all the activities of the partnership which may give rise to profits or income are excluded activities (see above) unless the person elects for the MTD for ITSA provisions to apply. Regulations will be required to provide further detail about how MTD for ITSA will apply to partnerships.

The MTD for ITSA provisions apply:

for persons, excluding partnerships, from 6 April 2024;
for general partnerships, from 6 April 2025 (although this has not yet been legislated and will require separate regulations); and
for other partnerships from a date yet to be set.

Efj Consulting