Making Tax Digital (MTD): A Simplification

Alongside the Autumn Statement, the government has announced the outcome of its ‘Making Tax Digital’ review for small businesses. The outcome of the review has prompted some welcome simplifications and tweaks to the regime that should make it easier for taxpayers to interact with the Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) regime.

Some of the main changes are described below:

• The MTD mandating threshold – Following the review the government will maintain the £30,000 mandating threshold from April 2027. This will reduce the number of taxpayers affected by MTD from 4.2 million, when the mandating threshold was expected to be £10,000, to 1.75 million.

• Improving the design of quarterly reporting – Rather than submitting income and expenditure figures for a specified three-month period, each quarterly update will now need to report cumulative figures for the tax year to date. This will remove the need to resubmit updates where changes need to be made.

• Removing End of Period Statements (EOPS) – The requirement to file EOPS will be removed. Taxpayers will now only need to file four quarterly updates, together with an end-of-year final declaration each tax year.

• Easements for Joint property owners – To reduce the administrative burden placed on landlords with jointly owned properties, affected landlords are now able to:

• • Choose not to submit quarterly updates of their expenses which relate to jointly owned properties.

• • Keep less detailed digital records in relation to their jointly owned properties, thereby simplifying data sharing between joint owners.

• Exemptions for certain groups – Certain groups, for whom the benefits of MTD will be limited or who face particular barriers, will be exempt from MTD. Two such groups identified are Foster Carers and those who cannot obtain a National insurance Number.

• Multiple agents within MTD ITSA – Taxpayers will now have the option to authorise more than one agent for MTD for ITSA. This would enable, for example, a bookkeeper to submit quarterly updates, whilst an accountant or tax advisor completes the end-of-year submissions and final declarations.

Get In Touch

If you have any concerns or questions about how MTD could affect you personally, please speak to your usual point of contact at Whitings or contact your local Whitings Office.

Disclaimer - All information in this post was correct at time of writing.