Making Tax Digital for Income Tax

Making Tax Digital for Income Tax (MTD ITSA) 2024

HMRC is adamant it has no intention of offering its own MTD ITSA software - it’s hoping the software companies will provide free versions.  

There may be free services for the basic expenses, employment or bank information via HMRC tools to be entered every three months– but they won’t cover the final mandated submission (similar to the current self-assessment return) 

At some time in the future, HMRC Assist – a system which prompts internal errors will also be layered on top of this. Once your calculation is in place, it will prompt top-level advice on things like expenses submitted.

For example

You are a hairdresser with a £20,000 income and £15,000 worth of expenses the system will nudge to say ‘if you submit this you’re likely to be investigated’ as it’s unlikely to be correct. 

HMRC anticipates “a strong MTD for ITSA software market, with a number of choices for customers, including free products”

None of the larger players has any plans to offer a free version of their products, so if things progress as expected in just under two years’ time, we will have smaller software providers on ‘free’ software and larger ones offering paid services. 

With this being discussed for seven years already and awareness low among most business owners, it will need a well-planned and delivered communication from HMRC to achieve the landing date of 2024 for MTD ITSA.