In the Autumn Budget 2024, the government signalled its commitment to the introduction of MTD ITSA in 2026 for those with turnover over £50,000, and in 2027 for those with turnover over £30,000. In a new development, the government announced the extension of MTD ITSA to those with turnover of more than £20,000 by the end of this parliament.
ICAEW had indicated in its pre-Budget submission that while it supports digitalisation of the tax system and accounting records, it does not support aspects of MTD ITSA. In particular, quarterly reporting will result in significant costs and additional administrative burden for taxpayers in return for limited benefit to HMRC.
More MTD ITSA-compliant software
Meanwhile, with the recent addition of Xero, 10 software developers have launched software that works with MTD ITSA:
- 1 2 3 Sheets Ltd (record keeping and bridging)
- APARI (record keeping through to submission)
- Digita Personal Tax - Thomson Reuters (bridging only)
- FreeAgent (record keeping through to submission, free option)
- Hammock for landlords (record keeping through to submission)
- Intuit QuickBooks Online (record keeping through to submission)
- Sage Accounting (record keeping through to submission)
- SE_reports (bridging only, free option)
- self assessment direct (record keeping and bridging, free option)
- Xero MTD for IT (record keeping through to submission).
HMRC MTD ITSA event
HMRC is hosting an MTD ITSA event in London (HMRC, 1 Ruskin Square, Croydon, CR0 2WF) on Thursday, 5 December 2024. The event is for agents and software developers who have clients who will need to use MTD ITSA. Attendees will find out more about the testing phase, have access to hands-on support to sign up to testing, and be able to ask HMRC questions.
Anyone interested in attending the event should email mailboxmakingtaxdigital@hmrc.gov.uk no later than 29 November 2024 to secure their space. By emailing HMRC, the person is agreeing to be contacted by HMRC before, during and after the event.
ICAEW’s view
Caroline Miskin, Senior Technical Manager Digital Taxation, ICAEW Tax Faculty, said: “Government and HMRC have been committed to the introduction of MTD ITSA for some time now. The announcement at the Budget confirms that the new government is fully behind the previous government’s plans and timetable. An extension to those with turnover of more than £20,000 with no specific implementation date is an unwelcome distraction but it is a clear sign of intent.”
Software availability has expanded, she explained, and those intending to join MTD ITSA testing must speak to their software developer before signing up.
“HMRC is on course to deliver its implementation plan. There are likely to be some bumps on the road but, barring unforeseen events, MTD ITSA will go ahead as scheduled. Regardless of whether agents and taxpayers intend to join the testing phase for the current tax year or from April 2025, they should be planning for the introduction of MTD ITSA rather than hoping for a further change in policy.”
Further information
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