Sean Farnell, Partner at leading regional accountancy firm Burgis & Bullock, has advised that despite the deadline being extended by two years, it is still vital that businesses start the process to move to digital record-keeping soon.
The changes announced by HMRC include that a self-employed business owner or landlord with a combined annual business or property income above £50,000 will need to follow the new rules for MTD for ITSA.
This includes keeping digital records of all business transactions - including submitting quarterly updates to HMRC, submitting an annual end-of-period statement, finalising tax returns for the year and paying any tax due to HMRC.
Other changes announced include individuals with an income of less than £50,000 but more than £30,000, who will be mandated to join the MTD for ITSA scheme in 2027.
The situation for landlords and sole traders earning less than £30,000 will be reviewed to see if MTD ITSA can be shaped to meet the needs of smaller businesses, however Partnerships will not be brought into MTD for ITSA, as previously planned, in 2025.
The points-based penalty system is also set to be extended to MTD for ITSA filers when they join.
Burgis & Bullock, which has offices in Leamington, Nuneaton, Rugby and Stratford-upon-Avon, has been working with its clients to move them onto the MTD for ITSA scheme and ensure they have the most efficient and effective digital systems in place.
Sean Farnell, Partner at Burgis & Bullock, said that while the deadline has been pushed back it will still be better for business owners to make the major change soon and ensure their new digital system is ready to go when required.
“April 2026 sounds like a long way off, but there is a lot to prepare, plan for and organised before that deadline in a little over three years,” he said.
“Failing to meet the new rules could end with business owners facing penalties from HMRC, and getting systems and processes ready for this big shift in taxation will take time.
“We advise to start the planning process soon to get ahead of the curve and make sure the business is ready to go digital when the MTD for ITSA rules kick-in for self-assessment taxpayers.
“We’re working with our clients to provide a full understanding of the true impact of the legislation and the steps that need to be taken in preparation.
“It may be daunting for some businesses but the new digital system will bring a wide range of benefits too, including better visibility of income and expenditure, improved control of business numbers and a clearer forward plan of tax liabilities for the year ahead.”
For more information about the impact of MTD for ITSA and for advice on setting up for the change visit www.burgisbullock.com
