Making Tax Digital for Income Tax Self Assessment will become mandatory from April 2024 which means sole traders and landlords with annual income from self-employment or property above £10,000 will have to follow the Making Tax Digital rules.
So that HMRC can iron out, test and develop the service, they are allowing for people to voluntarily use the service before April 2024 via a pilot scheme.
The service is availble to voluntarily use now, and if you would like to take part, you will need to do the following:
- use software that is compatible with Making Tax Digital for Income Tax
- use software to keep digital records
- send quarterly updates for business income and expenses
- submit your end-of-period statement
- submit a final declaration
Since July 2022, HMRC has invited customers will the following income types to the pilot scheme:
- self-employment (including multiple self-employments)
- UK property
- Gift Aid
- Pay As You Earn income, including employment income and occupational pensions (excluding those with a coded out liability)
- UK interest
- UK dividends
You will need to have an accounting period that aligns to the tax year (6 April to 5 April) to join the 2022/23 pilot and have MTD-compatible software before signing up.
If you think you might meet the criteria for MTD for ITSA, but do not wish to take part in the pilot, you should start planning for April 2024 by considering how to digitise your records and keep them up to date.