As part of HMRC’s mission to ‘Make Tax Digital’ (MTD), they’ve announced the mandatory dates for the online income tax self-assessment (ITSA). Under the MTD for ITSA rules, landlords and self-employed taxpayers must provide digital quarterly updates on their income tax.
As announced in the Autumn Statement 2023, taxpayers subject to income tax on their trade, profession, property income, or business with an income above £50,000 will be required to keep their accounting record electronically from April 2026.
Quarterly Updates: Your Questions Answered
For many, this change may be a daunting one. That’s why we’ve created this article to answer any questions you might have about moving your tax records online. From breaking down quarterly updates to instructions on submission, keep reading for the complete lowdown on HMRC’s latest announcement.
- Why Are Quarterly Updates Needed?
- Who Needs To Send Quarterly Updates?
- How Do You Submit Quarterly Updates?
Why Are Quarterly Updates Needed?
Quarterly updates are beneficial for both HMRC and the taxpayer. They’re a clear indication that the taxpayer is keeping their records up to date regularly and staying on top of their finances. Not just this, based on their reported income, taxpayers can receive an estimate of the income tax they’ll need to pay. This gives landlords and self-employed taxpayers more time to prepare for bills.
Additionally, in the latest MTD for ITSA announcements, HMRC clarified that quarterly updates will now be cumulative. This means errors in the previous quarter’s reporting can be amended in the following quarter. Resubmitting previous quarters is no longer necessary, making the whole process easier for the taxpayer.
Who Needs To Send Quarterly Updates?
From April 2026, landlords and self-employed people with an income over £50,000 will need to comply with MTD rules. This means they’ll need to submit their quarterly updates to HMRC electronically (either using suitable software or on a spreadsheet). The date for those with an income between £30,000 and £50,000 is a year later, in April 2027. There are currently no plans for implementing the MTD for ITSA rules for those earning under £30,000 annually.
How Do You Submit Quarterly Updates?
Quarterly updates can be sent to HMRC via MTD-compatible software. As long as your records are kept up to date, your accounting software will help you gather all of the necessary information. The taxpayer or an accountant on their behalf can submit this update. Any accountant or bookkeeper making the submission will need authorisation.
Taxpayers will have a month after each period end date to send their quarterly update. Failure to do so on time may result in a penalty, so it’s important to prepare for these changes well in advance.
Prepare For MTD For ITSA
We advise preparing for the transition to digital quarterly tax returns as soon as possible so you’re in the best position to make a seamless switch. If you’re looking for support with your MTD preparations, you’re in the right place. The Digital Tax Matters team has been preparing for tax digitisation for years and is expertly placed to help you navigate your quarterly tax returns. Get in touch with us to find out how we can support you.