HMRC begins new pilot testing for Making Tax Digital rules for self-employed

HMRC begins new pilot testing for Making Tax Digital rules for self-employed
Dan Martin
Dan MartinDan Martin Content & Events

Posted: Wed 24th Apr 2024

HM Revenue & Customs has launched new beta testing with taxpayers for the upcoming Making Tax Digital Income Tax for Self Assessment (MTD ITSA) rules.

From April 2026, self-employed individuals and landlords with an annual income over £50,000 will be required to submit quarterly tax updates to HMRC using approved software. It will be extended to those with income over £30,000 in April 2027.

For sole traders and landlords with an income below £30,000, the government said it is reviewing how MTD for ITSA "can be shaped to meet the needs of smaller businesses and the best way for them to fulfil their income tax obligations".

Making Tax Digital Income Tax for Self Assessment

After testing was paused in February 2023, the government department reopened private beta testing this Monday. Tax agents can sign up their clients, while self-employed people and landlords can register themselves.

To be eligible for the testing, all the following needs to apply:

  • your personal details are up to date with HMRC

  • you're a UK resident

  • you have a National Insurance number

  • you have submitted at least one Self Assessment tax return

  • you're up to date with your tax records - for example, you have no outstanding tax liabilities

  • you use an accounting period that runs from 6 April to 5 April

There are various situations which mean you can't sign up. They include having a high income child benefit charge, having a payment plan with HMRC, being a partner in a partnership and claiming Married Couple's Allowance. The full list is here.

To take part, you need to use compatible software that meets HMRC's minimum functionality standards. At the time of writing five products meet the criteria with 21 in development.

HMRC does not officially approve software so you should check with software providers to make sure it suits your needs. 

For those participating in the testing, HMRC's new late submission and late payment penalties will apply.

The penalties are points-based and mean financial penalties are not imposed for a single mistake. Financial penalties will only apply to those who persistently fail to meet their obligations. Late submission penalty points for missing quarterly updates will not be imposed during the testing phase.

MTD ITSA was first due to come into force in April 2023 but in September 2021, the change was delayed until April 2024 due to the impact of the coronavirus pandemic. In December 2023, the government announced another delay.

Related resources

Making Tax Digital for VAT: New rules and how to register

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Dan Martin
Dan MartinDan Martin Content & Events
I'm a freelance content creator and event host who helps small businesses and the organisations that support them. I'm also Enterprise Nation's Local Leader for Bristol. I have 20 years of experience as a small business journalist having interviewed hundreds of entrepreneurs from famous names like Sir Richard Branson and Deborah Meaden to the founders behind brand new start-ups. I've worked for a range of leading small business publications and support groups, most recently as head of content at Enterprise Nation where I was responsible for the prolific output of content on the company's blog and social media. I now freelance for Enterprise Nation as the website's news reporter and as the host of the Small Business sessions podcast. I'm based in Bristol where I run and host regular events with the local small business community in my role as Enterprise Nation's Local Leader for Bristol. I also have strong connections with other major business organisations in the south west region. In total, I've hosted over 100 events including conferences with an audience of hundreds for international brands like Xero and Facebook and live web chats from inside 10 Downing Street. With my partner, I co-run Lifestyle District, a lifestyle blog focused on culture, art, theatre and photography.

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