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MTD ITSA FAQ – Everything You Need to Know

Chris White • January 17, 2025

MTD ITSA FAQ – Everything You Need to Know

MTD ITSA FAQ: Your Guide to Navigating the New Rules

At CW Licensed Bookkeeper & Accountant, we aim to make tax compliance as stress-free as possible. With Making Tax Digital for Income Tax Self Assessment (MTD ITSA) on the horizon, here’s a comprehensive FAQ to help you prepare.


1. What is MTD ITSA?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC’s initiative to modernise the tax system. It requires self-employed individuals and landlords to maintain digital records and submit quarterly updates via MTD-compatible software.


2. Who Does MTD ITSA Apply To?

MTD ITSA applies to:

  • April 2026: Self-employed individuals and landlords with annual business or property income over £50,000.
  • April 2027: Those earning between £30,000 and £50,000 annually.
  • Plans for individuals earning under £30,000 are still under consultation.


3. When Does MTD ITSA Start?

Key dates for compliance:

  • April 2026: For those earning over £50,000.
  • April 2027: For those earning between £30,000 and £50,000.


4. What Records Do I Need to Keep Digitally?

You’ll need to maintain digital records of:

  • Income
  • Expenses
  • Bank transactions relevant to your business or property

These must be stored and submitted via MTD-compatible software.


5. How Often Do I Need to Report Under MTD ITSA?

You’ll need to submit:

  • Quarterly updates: Summarising income and expenses.
  • An End of Period Statement (EOPS): At the tax year-end to finalise your figures.
  • A Final Declaration: Declaring all your income and confirming your tax liability.


6. What Software Do I Need?

You’ll need MTD-compatible software to manage records and submissions. Trusted options include:

  • QuickBooks
  • Xero
  • FreeAgent

We’re here to help you select and set up the best software for your needs.


7. What If I Don’t Comply?

Non-compliance may result in HMRC penalties, including fines for late submissions or failing to maintain digital records.


8. Do I Still File a Self Assessment Tax Return?

No, MTD ITSA replaces the traditional annual Self Assessment. Instead, you’ll use MTD-compatible software for quarterly updates, an EOPS, and a Final Declaration.


9. How Can CW Licensed Bookkeeper & Accountant Help?

We provide:

  • Personalised advice for your specific situation.
  • Guidance on selecting and setting up MTD-compatible software.
  • Support for quarterly updates and year-end submissions.
  • Peace of mind through expert compliance support.

10. What Should I Do Now?

Here’s how to prepare:

  • Identify when MTD ITSA applies to you.
  • Select and set up MTD-compatible software.
  • Organise your financial records for accuracy.
  • Seek professional advice to ensure a smooth transition.



Still Have Questions? Let’s Chat!

At CW Licensed Bookkeeper & Accountant, we’re committed to simplifying MTD ITSA for self-employed individuals and landlords. Whether it’s software setup or compliance advice, we’re just a call or email away.

By Chris White January 17, 2025
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is a major shift in the way self-employed individuals and landlords in the UK manage and report their taxes. This government initiative aims to modernize the tax system, reducing errors and streamlining the process. If you’re self-employed or a landlord, MTD ITSA will affect how you record your income and file tax returns. Here’s everything you need to know about what it is, how it will impact you, and how to prepare for the change. What Is MTD ITSA? MTD ITSA stands for Making Tax Digital for Income Tax Self Assessment . It builds on the government’s Making Tax Digital initiative, which is already in place for VAT. MTD ITSA focuses on digitizing how self-employed individuals and landlords report their income tax. Under MTD ITSA, you’ll need to: Keep digital records of your income and expenses. Submit quarterly updates to HMRC using MTD-compatible software. File an End of Period Statement (EOPS) and a Final Declaration to confirm your annual income and tax obligations. Who Does MTD ITSA Apply To? MTD ITSA will roll out in phases: April 2026 : Applies to self-employed individuals and landlords with an annual income exceeding £50,000. April 2027 : Expands to those earning between £30,000 and £50,000 annually. Future plans for individuals earning below £30,000 are still under consultation, so it’s essential to stay updated. How Will MTD ITSA Affect You? Digital Record-Keeping If you currently use spreadsheets or paper records, you’ll need to switch to MTD-compatible software to maintain digital records. Quarterly Reporting Instead of submitting one annual Self Assessment tax return, you’ll file four quarterly updates summarizing your income and expenses. End-of-Year Submissions You’ll still finalize your accounts at year-end, but the process will be streamlined with digital tools. More Transparency With quarterly updates, you’ll have a clearer view of your tax obligations, reducing surprises at year-end. What Do You Need to Do to Prepare for MTD ITSA? Check if MTD ITSA Applies to You Review your annual self-employment or rental income to determine when you’ll need to comply. Choose MTD-Compatible Software Popular options include QuickBooks, Xero, and FreeAgent. We can help you select and set up the right software for your business. Organize Your Records Ensure your income and expenses are up to date and transition from paper records to digital systems. Learn the New Process Understand how to submit quarterly updates, End of Period Statements, and the Final Declaration. Seek Professional Advice Navigating MTD ITSA can be challenging, especially if you’re new to digital accounting. A trusted bookkeeper can guide you through the process and ensure you remain compliant. How CW Licensed Bookkeeper & Accountant Can Help At CW Licensed Bookkeeper & Accountant, we understand that MTD ITSA can feel overwhelming. That’s why we’re here to make the transition as smooth as possible. Here’s how we can support you: Tailored Advice We’ll help you understand how MTD ITSA impacts your specific situation and create a plan to ensure compliance. Software Setup and Training We’ll assist in choosing, setting up, and training you on the best MTD-compatible software for your needs. Quarterly Reporting Support Let us handle your quarterly updates to HMRC so you can focus on running your business. Year-End Submissions From the End of Period Statement to the Final Declaration, we’ll ensure your year-end reporting is accurate and timely. Ongoing Support We’re here to answer questions, provide troubleshooting, and keep you on track with MTD requirements.  Get Ready for MTD ITSA Today! MTD ITSA is a significant change, but you don’t have to navigate it alone. With CW Licensed Bookkeeper & Accountant by your side, you can make the transition stress-free and compliant. 📧 Contact us today at info@cwabc.co.uk 📞 Call us on 07306 812321 Let us help you prepare for the future of tax reporting!
By Chris White December 29, 2024
Making Tax Digital: What It Means for You and How to Prepare
By Chris White December 4, 2024
🎵 On the first day of Christmas, my accountant sent to me: A client with a shoebox of receipts! 🎵 On the second day of Christmas, my accountant sent to me: Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the third day of Christmas, my accountant sent to me: Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the fourth day of Christmas, my accountant sent to me: Four bank mismatches, Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the fifth day of Christmas, my accountant sent to me: Fiiiiiive… late… PAYE!!! Four bank mismatches, Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the sixth day of Christmas, my accountant sent to me: Six overclaimed expenses, Fiiiiiive… late… PAYE!!! Four bank mismatches, Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the seventh day of Christmas, my accountant sent to me: Seven QuickBooks glitches, Six overclaimed expenses, Fiiiiiive… late… PAYE!!! Four bank mismatches, Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the eighth day of Christmas, my accountant sent to me: Eight petty cash errors, Seven QuickBooks glitches, Six overclaimed expenses, Fiiiiiive… late… PAYE!!! Four bank mismatches, Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the ninth day of Christmas, my accountant sent to me: Nine reconciliations, Eight petty cash errors, Seven QuickBooks glitches, Six overclaimed expenses, Fiiiiiive… late… PAYE!!! Four bank mismatches, Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the tenth day of Christmas, my accountant sent to me: Ten direct debits missing, Nine reconciliations, Eight petty cash errors, Seven QuickBooks glitches, Six overclaimed expenses, Fiiiiiive… late… PAYE!!! Four bank mismatches, Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the eleventh day of Christmas, my accountant sent to me: Eleven VAT adjustments, Ten direct debits missing, Nine reconciliations, Eight petty cash errors, Seven QuickBooks glitches, Six overclaimed expenses, Fiiiiiive… late… PAYE!!! Four bank mismatches, Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎵 On the twelfth day of Christmas, my accountant sent to me: Twelve sleepless nights, Eleven VAT adjustments, Ten direct debits missing, Nine reconciliations, Eight petty cash errors, Seven QuickBooks glitches, Six overclaimed expenses, Fiiiiiive… late… PAYE!!! Four bank mismatches, Three missing invoices, Two tax deadlines, And a client with a shoebox of receipts! 🎄🧾 Cheers to the bookkeepers keeping it all together—mostly! 🎄 🎄 As the holidays roll in, so does the end-of-year financial chaos! Bookkeepers and accountants often feel like they're living through their own version of the "12 Days of Christmas." With that in mind, here's a humorous breakdown of the realities we face—perfect for our clients to appreciate the juggling act behind the scenes. Day 1: A Client with a Shoebox of Receipts The Reality: This classic trope never gets old—or easier. Shoeboxes filled with crumpled, fading receipts are the bane of a bookkeeper’s existence. Pro Tip for Clients: Switch to digital receipt storage! Apps like Dext or Hubdoc can save you (and us!) hours of work. Day 2: Two Tax Deadlines The Reality: Tax deadlines seem to multiply like rabbits, and missing one can mean penalties. Whether it’s VAT or income tax, the clock is always ticking. Pro Tip for Clients: Mark your calendar now and get your documents in early—we’ll make sure you stay penalty-free. Day 3: Three Missing Invoices The Reality: A missing invoice means chasing payments, which affects cash flow and makes reconciliation a nightmare. Pro Tip for Clients: Stay organized with invoicing software. Send reminders to clients, and always save digital copies. Day 4: Four Bank Mismatches The Reality: Reconciling bank accounts can feel like solving a mystery. When transactions don’t match, it’s hours of detective work. Pro Tip for Clients: Regularly review your statements and report discrepancies immediately to avoid delays. Day 5: Fiiiiive… Late… PAYE!!! The Reality: Late payroll submissions lead to fines and disgruntled employees. It’s a big red flag in any business. Pro Tip for Clients: Automate PAYE submissions with payroll software to keep everything on track. Day 6: Six Overclaimed Expenses The Reality: Overclaimed expenses lead to audits, penalties, and sleepless nights for everyone involved. Pro Tip for Clients: Only claim expenses that are clearly business-related. When in doubt, consult with us! Day 7: Seven QuickBooks Glitches The Reality: Tech is wonderful—until it’s not. Software glitches can throw off entire reports and cause endless frustration. Pro Tip for Clients: Regular updates and backups can prevent most issues. Let us troubleshoot if you’re stuck. Day 8: Eight Petty Cash Errors The Reality: Petty cash is the small but mighty troublemaker. Errors here often pile up unnoticed until year-end reviews. Pro Tip for Clients: Maintain a petty cash log and reconcile it weekly to avoid surprises. Day 9: Nine Reconciliations The Reality: Reconciliation isn’t just a task—it’s an art. Matching every penny is satisfying, but it’s no small feat. Pro Tip for Clients: Submit complete and accurate records regularly so we can keep your books clean. Day 10: Ten Direct Debits Missing The Reality: Untracked or canceled direct debits can lead to unpaid bills, which impacts your credit and vendor relationships. Pro Tip for Clients: Set reminders to review direct debits monthly and update your payment methods when needed. Day 11: Eleven VAT Adjustments The Reality: VAT adjustments are tricky. They require precision and deep knowledge of tax laws. Pro Tip for Clients: Keep thorough records of VAT-related transactions. If you’re unsure, let us handle it. Day 12: Twelve Sleepless Nights The Reality: End-of-year madness leads to late nights for bookkeepers and accountants everywhere. Deadlines, reconciliations, and audits take their toll. Pro Tip for Clients: Early preparation and consistent record-keeping can save everyone from holiday burnout. Final Thought: Bookkeeping may seem mundane, but it’s the backbone of your business's financial health. By staying organized and working with a licensed bookkeeper, you can avoid the chaos of “12 sleepless nights.” Get in Touch: Need help with any of the "12 Days of Bookkeeping"? Contact CW Licensed Bookkeeper & Accountant at info@cwabc.co.uk or 07306 812321. Together, we’ll keep your finances merry and bright!
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