Important MTD Dates and Deadlines

In our last article, we explained the government’s Making Tax Digital for Income Tax initiative (MTD for IT) and how it may affect you.  With no more delays expected to the implementation of the scheme and the introduction of it now less than a year away for some, it’s essential to understand what action you need to take and when by as well as understanding what qualifies as digital record keeping. So, in this post, we take a closer look. 

MTD for IT start dates

6 April 2026: Those with annual gross income of over £50,000 from self-employment and / or property income.

6 April 2027: Those with annual gross income of over £30,000 from self-employment and / or property income.

6 April 2028: Those with annual gross income of over £20,000 from self-employment and / or property income.

By default, the reporting quarters will be based on the tax year.

The filing deadlines will be one month after the quarter end as follows: 

 It will be possible to elect for the submissions to be made for quarters based on the calendar year, i.e. 1 April to 30 June, but the election must be made prior to the first quarterly submission. 

Tax payment dates

There will be no changes to the current tax payment dates.  

Balancing payments will continue to be due by 31 January following the end of the tax year.

Payments on account will continue to be payable by 31 January and 31 July.

End of year submission

After the fourth and final submission has been made, a ‘digital tax return’ will need to be submitted.

This will replace the current Self-Assessment Tax Return (SATR).  It will be pre populated with the information HMRC already hold, including any PAYE figures.

This return will report any relevant adjustments, required for tax purposes, to the quarterly information already submitted.  You will also report any other income sources, as well as make any claims for reliefs.  Any other information that would normally be reported on your annual tax return will be reported on the end of year submission.

Filing deadline

The end of year submission will be due by 31 January following the end of the tax year, just like the current SATR.

Digital Record-Keeping

It is a legal requirement that all individuals within the scope of MTD for IT must keep digital records of their income and expenses, using software that is compatible with MTD for IT.

It will be possible to maintain spreadsheet records, but this will require ‘bridging’ software to make the submissions.

Digital records

Cloud Accounting Software is digital and will meet the requirements of MTD for VAT.

Handwritten cashbooks and ledgers are not digital.  

Spreadsheets and desktop software are not digital on their own, but in association with bridging software, will meet the digital requirement.

Quarterly information required

Businesses must keep digital records of the amount, category and date of income and expenses relating to their sole trade and / or property business. 

Where business or property income is below the VAT threshold, ‘three-line accounts’ will be permitted to report total income, expenses and profit or loss, without having to allocate these to specific categories.  The exception to this being finance costs for landlords which will need to be categorised separately. 

Digital links

If accounting records are maintained in more than one program, there must be digital links between   each piece of software.

Digital links include: 

• Emailing a spreadsheet containing digital records to a tax agent so that the agent can import the data into their software to carry out a calculation
• Transferring a set of digital records onto a portable device, for example a memory stick, and physically giving this to an agent to import that data into their software
• XML, CSV import and export, and download and upload of files
• Automated data transfer
• Linked cells within or between spreadsheets – the transfer of information by the use of copy and paste or cut and paste does not meet the requirement for a digital link.

 We are still awaiting further guidance from HMRC on digital links.

Business bank accounts

With MTD for IT coming, now is the time to separate out your business banking from your personal banking if you currently have a single bank account, or you put multiple personal transactions through your business bank account.

Cloud Accounting Software has bank feeds under the Open Banking initiative which will help simplify the creation of digital records, so having the relevant business data separate from your personal banking will make life easier in the future.

There is a further advantage to having separate bank accounts for your business and you personally.  In the event that your tax affairs are subject to enquiry by HMRC, it is only the business bank account transactions which you might have to disclose to HMRC, with your personal banking transactions remaining private and undisclosed in the HMRC enquiry.

We would be pleased to work with you in evaluating your response to MTD for IT. As your accountant, we will support you through the changes and provide the ongoing services that you need.  Please get in touch for more information.