Extension of Making Tax Digital for Income Tax (Individuals)

On 19 December 2022, the government announced the extension of Making Tax Digital (MTD) for Income Tax (individuals) from April 2024 to April 2026 (except general partnerships). In this article, a brief of the changes in MTD for ITSA will be explained.

MTD for ITSA Extension

  • From April 2026, you must meet the MTD compliance if you have more than £50,000 qualifying income.
  • From April 2027, if your qualifying income is more than £30,000, you must comply with MTD requirements.

The qualifying income refers to your gross self-employment income or rental property income or both in together. Gross income means the total income before the deduction of expenses.

Example 1: You have gross income of £30,000 from self-employed and property rental income of £25,000, so the total income is £55,000. Here, you are subject to MTD for ITSA from April 2026 as having total qualifying income more than £55,000 from both self-employed and property rental.  

MTD for Jointly Owned Property:

You may have property rental income from jointly owned property and in this case, your share of the property income will count as your qualifying income rather than the total income of the jointly owned property.

Example 2: You have jointly owned property income of £50,000 (equal share to you and your partner, £25,000 each). You also don’t have any income from self-employed. Here, you are not subject to MTD for ITSA from April 2027 as having less than £30,000 income per individual.

Other matters of MTD for ITSA:

  • You may use MTD for ITSA in voluntary even if your income is less than the qualifying income.
  • Your residency and domicile status will effect on your qualifying earning. For instance, you are UK resident and domicile and having self-employed income in the UK, but property rental income from overseas. Here, your overseas property rental income will count as qualifying income along with your self-employed income here in the UK. However, if you are domiciled outside of the UK then only your UK self-employed and property rental income will count as qualifying income.
  • You may apply for exemption from MTD for ITSA if you can not use software due to your age, disability, location or other unavailable circumstances.
  • However, you can not sign up for MTD in case of you are trustee, personal representative of someone who has died, Lloyd’s member and non-resident company.

Here to Help on Your MTD for ITSA?

At The Stan Lee, we have MTD compatible software for you and pleased to support confidently. For further information and about your MTD for ITSA, please get in touch with one of the friendly team and let’s find out how we can help you.

Disclaimer: The above information is just as a general information that might help you. However, we highly recommend having expert advice suited for your circumstances. The Stan Lee and its author are not liable if you rely on this and have any consequences.