5 key considerations when choosing MTD for ITSA software

If you’re a self-employed sole trader, private residential landlord or someone else who reports income and pays tax via Self Assessment, 6 April 2024 is a very important date. That’s when new tax rules are being…

5 Minute Read

Last Updated: 28th April 2022   |   Created: 28th April 2022

If you’re a self-employed sole trader, private residential landlord or someone else who reports income and pays tax via Self Assessment, 6 April 2024 is a very important date.

That’s when new tax rules are being introduced and you’ll need to comply with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requirements. These will be very different. Making Tax Digital is a huge government initiative that will digitise the UK tax system and it’s already impacted VAT-registered businesses.

How will Making Tax Digital for ITSA affect you?

  • Come April 2024, you’ll no longer need to fill in an annual Self Assessment tax return.
  • Instead, under MTD for ITSA, you must maintain digital records of your income and expenses and send a digital quarterly summary to HMRC. Then you’ll receive an estimated tax calculation based on the data you’ve provided.
  • At the end of the tax year you’ll make an end of period statement, confirming the accuracy of the figures you’ve submitted, with any accounting adjustments made, and submit your final declaration.
  • HMRC will tell you how much tax you owe, which you must pay by 31 January in the following tax year. You may also owe National Insurance contributions, if you’re a sole trader.
  • You can apply for exemption from MTD if requirements aren’t practical for you, for example, because of your age, disability, location or other justifiable reason (which can include religious grounds).

To comply with MTD for ITSA requirements, you’ll need to use compatible software and here are five key considerations to bear in mind.

1. Is your existing software MTD for ITSA compliant?

Your current accounting software won’t enable you to meet MTD requirements, not until that additional functionality has been developed. If in doubt, ask your software provider if they plan to make their solutions MTD compliant. If you maintain records in spreadsheet software, that won’t be MTD compliant, in which case you should ask yourself the following question…

2. Do I go for MTD for ITSA-compatible software or “bridging software”?

HMRC is not offering its own MTD for ITSA-compatible software. You must either use third-party MTD for ITSA-compatible software or “bridging software”.

  • Compatible software can integrate with HMRC’s systems, so that you can meet all MTD for ITSA reporting requirements. Some MTD for ITSA-compatible software is already available, while other options are in development.
  • Bridging software works with non-MTD-compatible software, spreadsheets, etc, enabling you to send the necessary information digitally in the right format to HMRC when required.

3. What are the associated costs for MTD for ITSA-compatible software?

HMRC does not endorse or recommend any product or software provider. Most solutions are likely to involve a monthly or yearly subscription, which should provide you with additional features, functionality or convenience. Free versions with limited functionality and benefits may be available.

4. What about ease of use, flexibility, adaptability and support?

It should be relatively easy to learn how to use your MTD for ITSA compatible software or bridging software and work with it week to week. It should offer flexibility and be adaptable should your circumstances change. If you run a business, having a solution that can be integrated into your other systems can be highly advantageous. Ask lots of questions of software providers and (if possible) fully road test software before you invest in it. Crucially – find out what customer support is available.   

5. How will you increase your MTD for ITSA knowledge?

You may not currently maintain financial records of your taxable income or expenses. When MTD for ITSA is introduced in 2024, if you can’t pay someone else to do it, you’ll have to learn to do it yourself. The MTD for ITSA reporting requirements will be new for everyone; it may take time to get it right. Try to pick up as much knowledge as you can so that you minimise any problems when you’re getting used to the new MTD for ITSA software.  

Should you join the MTD for ITSA live test pilot?

Signing up for MTD for Income Tax Self Assessment isn’t required at the moment, but some taxpayers have already joined a live test pilot scheme. Joining them could be wise, so that you can get used to the new MTD for ITSA requirements and iron out any software issues you may experience.

You’ll also be able to gain now from MTD for ITSA’s various benefits. For example, each quarter you’ll know how much tax you owe, based on the figures you’ve entered, so you can better budget for paying your tax bill.

You must have Making Tax Digital for Income Tax-compatible software before you sign up. And you must be a UK resident who is registered for Self Assessment, while your tax returns and Income Tax payments must be up to date. Visit government website Gov.uk for more information.

While Self Assessment is still in place, GoSimpleTax offers you an easier and quicker way to complete and file your tax return. It’s simple to use, offers hints and tips, enables you to store receipts for your allowable expenses and is backed up by highly experienced support team.

Having already launched a MTD for VAT software solution, GoSimpleTax is also developing its own MTD for ITSA software solution. Details will be released soon, so watch this space.

Trusted by over 15,000 subscribers

You don't need to be an expert to complete your self assessment tax return.

Start your free trial

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.

How GoSimpleTax Works

01.
Register

Simply register for free with your full name and email address.

02.
Select Your Income

Select the income you receive and follow the hints and tips for potential tax savings.

03.
Validate Your Information

Validate your personal information and submit directly to HMRC to get confirmation in just seconds.

ipad

Work Anywhere, With Any Device

Gone are the days of fretting over a calculator surrounded by scraps of paper at the eleventh hour.

GoSimpleTax’s tax return software uses the information you upload in real time to calculate your income and expenditure, working out the tax you owe and sending you helpful notifications when there’s the possibility of a mistake.

Start your free trial

"The software is intuitive and proved very easy to navigate. I found the whole process refreshingly simple. I saved a lot of money too!"

Steve J.

Ordained Presbyter

"Easy to use and value for money. Everything you need to do your tax."

Gordon J.

Self Employed

"It fills in all the forms and sends them to the Inland Revenue. Not expensive either. Takes the stress out of doing your tax return online."

Ross G.

Team Rector

Start your free trial