The pilot for Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is being extended by HMRC to more self-employed workers and landlords. The MTD pilot for income tax was in 2017, with a select group of invited sole traders, landlords and their agents.
From this month (July 2022), those taking part will be able to test MTD ITSA before April 2024, including their own internal processes for managing MTD.
HMRC wants more agents to start signing up a small number of their clients to trial the system. They would like to include customers with the following income types into the pilot:
self-employment (including multiple self-employments)
Pay As You Earn income, including employment income and occupational pensions (excluding those with a coded out liability)
Who can use Making Tax Digital for Income Tax
Taxpayers and their agents can sign up and participate in a voluntary Making Tax Digital (MTD) for Income Tax pilot scheme. In order to take part clients will need to have an accounting period that aligns with the tax year in order to take part in the pilot. You can voluntarily sign up for the service if all of the following apply:
you’re a UK resident
you’re already registered for Self Assessment
your accounting period aligns to the tax year — for example, 6 April 2021 to 5 April 2022
you have submitted at least one Self Assessment tax return
you’re keeping digital records
one or more of the following were included in your last return:
an existing self-employment income
a UK property source
a foreign property source
you’re up to date with your tax records — for example, you have no outstanding tax liabilities
From April 2024, all businesses with annual income from self employment or property above £10,000 will have to follow MTD rules.
Signing up to the Pilot will mean that you will allow your software to transmit your accounting data to HMRC every three months. Under MTD, the quarterly reporting is a summary, providing a total of the incomes and outcomes going through the business per quarter.
'We want to ensure this is well tested before mandation, and that agents and customers have opportunities to feedback on how it will work in practice. That's why we're running a pilot, inviting agents to recommend clients who can help us test and learn.
'The pilot is still a test environment. Those taking part have the benefit of testing the MTD ITSA before April 2024, including their own internal processes for managing MTD.
'Agents and customers are already taking part, and we would like to encourage more agents to start signing up a small number of their clients.'