Major tax professional bodies have expressed their support for the decision to exempt numerous lower-income businesses and landlords from the new digital record-keeping and reporting obligations. The Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) have lauded the government’s move announced in today’s Autumn Statement.
The update revealed that, at present, Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) would only be applicable to sole traders and landlords with a turnover exceeding £30,000. Originally proposed to encompass those with self-employment or property incomes above £10,000, the scheme’s scope was altered in December 2022. It was then declared that individuals with incomes surpassing £50,000 would fall under MTD for ITSA from April 2026, extending to those with a turnover above £30,000 from April 2027. Additionally, an evaluation was initiated to assess the requirements of those with turnover below £30,000.
Alison Kerrey, chair of the joint CIOT/ATT Digitalisation & Agent Services Committee, expressed satisfaction, stating, “We are pleased that the government has listened to our and others’ concerns about bringing small businesses and landlords into MTD for ITSA.” She referenced a survey conducted among over 500 CIOT and ATT members in the summer of 2023, revealing that 86% opposed mandating MTD for ITSA requirements for businesses/landlords with incomes under £30,000.
Kerrey emphasized the relief this decision brings, potentially saving affected entities substantial compliance costs. Furthermore, it allows for a gradual expansion of the program, affording HMRC, taxpayers, and their advisors the necessary adjustment period.
Today’s announcement confirmed the retention of previously outlined timelines and thresholds from December 2022, subject to future assessments. Amendments were also introduced for those falling within the scheme, including cumulative quarterly updates, eliminating the necessity of filing End of Period Statements (EOPS) for each income source, and streamlining record keeping and reporting for landlords of jointly-owned properties.
Expressing ongoing concerns, CIOT and ATT jointly addressed Nigel Huddleston, the new Financial Secretary to the Treasury, last week. They highlighted worries regarding the program’s costs, benefits, and readiness of both HMRC and taxpayers for the impending system change.
Kerrey further articulated the positive reception of alterations such as submitting cumulative quarterly reports and the removal of EOPS, which were perceived as unnecessarily burdensome.
She concluded by stating, “Despite today’s announcements, there is still real concern as to whether MTD for ITSA and HMRC will be fully ready for a 2026 start, and whether the projected financial benefits of the project and ease to the taxpayers will materialize. CIOT and ATT will continue to work closely with HMRC to ensure that the 2026 start date for MTD for ITSA goes as smoothly as possible and that taxpayers and their agents are prepared for the change.”