HMRC has published more details on how Making Tax Digital for Income Tax (MTD for
IT) will work for buy-to-let landlords and sole traders with qualifying income
over £10,000.
The new income tax framework for MTD for IT will be mandatory from 6 April 2024.
HMRC is now asking for users to sign up for the test phase.
The new system will replace self assessment tax returns for anyone who qualifies
for MTD for IT as they will have to submit all non-qualifying income through the
Personal Tax Account (PTA) system instead.
Anyone who qualifies will have to make quarterly submissions, and the new
deadline for end of year statements will be 31 January after the end of each tax
year.
HMRC will use data from self assessment tax returns to calculate qualifying
income in the first instance and will contact all affected taxpayers directly to
inform them that they fall under the mandatory MTD for IT rules.
HMRC states:
'Your qualifying income is the combined income that you get in a tax year
from self-employment and property income sources. We assess this before you
deduct expenses (that is, your gross income or turnover).
'All of your qualifying income must be reported through MTD compatible
software.
'All other sources of income reported through self assessment, such as income
from employment, dividends or savings, do not count towards your qualifying
income. You will need to report income from these sources using either your
MTD compatible software (if it has the functionality) or HMRC online
services account.'
Internet links: Using MTD for IT Check if you can sign up for MTD for IT