Last week we discussed the details of Making Tax Digital for Income Tax Self-Assessment (MTD ITSA), the new rules governing self-assessment tax returns which will apply to all landlords and self-employed workers earning £10,000 per year or more from 2024. Here, we’ll take a look at some of the other criteria, dates and details in the upcoming system.
To recap, MTD ITSA will mean that qualifying self-assessment customers must submit quarterly tax returns to HMRC, in addition to an End of Period Statement (EOPS) detailing the entire tax year. Returns must be submitted with cloud-based software and taxpayers will be required to digitally keep their tax records.
For self-employed workers or landlords earning over £10,000 per year from rental or self-employed income, MTD ITSA will be mandatory. Those earning under £10,000 per year will continue to file their tax returns in the current way.
The same dates for MTD ITSA will apply to all customers for both the four quarterly filings and the year-end EOPS. The first quarter of the year will begin on April 6th and end July 5th, with the filing deadline for the first quarter return on August 5th. The second quarter runs from July 6th to October 5th, with the return deadline on November 5th. The third quarter runs from October 6th to January 5th, with the return due February 5th. The fourth quarter begins on January 6th and ends on April 5th, with the quarterly return due on May 5th. The EOPS, meanwhile, is due each year by January 31st, the same date as current annual tax returns.
One slight exemption to these dates is that customers can request to move them so that they accord with the start of the month. This would mean that the first quarter runs April 1st – June 30th, the second quarter July 1st – September 30th, the third quarter October 1st – December 31st and the fourth quarter January 1st – March 31st. However, filing deadlines would remain unchanged.
Despite the significant changes that MTD ITSA will bring to the way tax returns are filed, payment dates will remain the same. Payments for income tax will be due on the usual date of January 31st, while payments on accounts will need to be made in January and July.
The software that self-assessment customers use to file their quarterly returns will keep track of their tax bill after each filing, in theory making it easier for customers to budget over the course of the year and ensuring they can put enough aside to pay their bill in January.
While MTD ITSA will bring wholesale changes to the way many self-assessment taxpayers file and will require some adjustment, the rules are still more than two years away from coming in, giving self-employed workers plenty of time. While HMRC is still deciding the finer points, more details will be released this year and several freelancer platforms have already confirmed that their technology will be compatible with MTD ITSA filings.
Author: Steven English
04.02.2022
