HMRC's commitment to making tax digital (MTD) for Income Tax Self-Assessment (ITSA) is making waves in the British tax system, providing taxpayers with more opportunities and better reporting options going forward.

As part of this transition, HMRC is making sure a phased approach is employed to allow self-employed people and landlords to make the most of their taxpaying experiences over the upcoming tax year. With a start date of April 2026 rather than 2024 as originally planned, it gives taxpayers ample time to prepare for making a smooth transition into Making Tax Digital.

This move has been celebrated by many because it offers more convenience, accuracy, and efficiency when it comes to filing taxes online.

Why has MTD for income tax self-assessment been delayed?

The making tax digital (MTD) for income tax roll-out has been delayed - but don't despair! This is actually good news, as HMRC's motivation behind the delay is to give businesses a much-needed breather during this challenging economic environment.

However, despite the benefits associated with making tax digital being undeniable, making the switch from the traditional system to MTD for income tax in the taxable year still requires plenty of preparation and caution. We are all embracing digitalisation, so let's do it right and get ready for a smooth transition.

Mandatory digital tax records

This new making-tax-digital law means that, come 2026, self-employed individuals and landlords making an income of above £50,000 will be required to keep digital records of their income and expenditure and update the HMRC quarterly with the help of compatible MTD software.

This requirement will extend to those making between £30,000 and £50,000 from April 2027 onwards, making it easier for taxpayers to handle their taxes efficiently, making the long-term gain for all taxpayers even better. It's an exciting step forward for HMRC and taxpayers alike, then!

What does this mean for small businesses?

The government remain committed to making an effort to meet the needs of smaller businesses by launching a review into making tax digital (MTD) for the income self-assessment tax return. This announcement could change how these small companies pay their taxes and allow them to better align with the Tax Administration Strategy.

The review aims to identify how MTD for ITSA can be beneficially tailored to these businesses making £30,000 or less so that they, too, can become compliant for the next tax year. We cannot wait to see what changes this review brings and hope it will help smaller businesses enjoy a smoother, more successful journey when taking care of their taxation obligations.

Need some help transitioning to Making Tax Digital for income tax self-assessment?

Although 2026 may seem a while away, planning your tax affairs and getting ready for the mandatory Making Tax Digital beforehand is essential if you’re self-employed or running a business. Making Tax Digital for Self-Assessment tax returns provides the necessary tools to make this happen.

Get in touch with an accountant today; you could start to benefit from tax payments being kept digital and secure while also enabling you to store your tax information so that it can be reused when necessary.

So why wait? Get prepared now and get in contact with an accountant that can help guide you through every step of Making Tax Digital for Self Assessment tax returns.