Making Tax Digital for Income Tax Self-Assessment – November 2024 update

Associate Director Martin Kerr provides an update on Making Tax Digital for Income Tax Self-Assessment and HMRC’s expanded plans for a pilot scheme, following the 2024 Autumn Budget from Chancellor Rachel Reeves.  

What did the 2024 Autumn Budget say about Making Tax Digital for Income Tax Self-Assessment?

Earlier this year we provided a comprehensive update on the Making Tax Digital for Income Tax Self-Assessment programme. During Rachel Reeve’s first Budget as UK Chancellor, it was reiterated that modernising the tax system remains high on the Government’s agenda. The Making Tax Digital (MTD) programme for Income Tax Self-Assessment (ITSA) is a key part of that process.

Consequently, HMRC is pushing on with preparing their systems for individuals to submit quarterly ITSA returns where their gross self-employment income, or gross rental income, is more than £50,000 per annum, from April 2026.

What are the income thresholds for Making Tax Digital for Income Tax Self-Assessment?

In a surprise announcement, it was confirmed that a third tranche of taxpayers will be included in the programme. The previously announced second tranche – individuals with gross self-employed income or gross rental income in excess of £30,000 – will still need to comply by April 2027. The third tranche of individuals with self-employed gross income or gross rental income of more than £20,000 will come under MTD for ITSA before the end of the current Parliament. 

How are the Making Tax Digital for Income Tax Self-Assessment thresholds calculated?

At this point is it worth reiterating that the gross income thresholds will be determined by the taxpayer’s income in the two years before inclusion in Making Tax Digital for Income Tax Self-Assessment. Therefore, individuals with gross income over £50,000 for the year ended 5 April 2025 will be expected to comply from April 2026.

You can learn more about the thresholds and the points-based penalty regime for non-compliance in our previous Making Tax Digital for Income Tax Self-Assessment update.

Pilot programme offers the chance to get used to new Income Tax Self-Assessment rules

HMRC continues to run its pilot programme for Making Tax Digital for Income Tax Self-Assessment. As the thresholds and dates of implementation have now been confirmed, we strongly encourage anyone meeting the criteria to consider joining the pilot.

The opportunity to become familiar with the process and get used to the methods of submission will be invaluable when it becomes mandatory. This is in addition to the likelihood of teething problems when the system is fully introduced. With so many taxpayers being added to MTD, there is a high potential for limited customer support services.

Making tax less taxing

The team at Consilium would be delighted to have an informal chat about any questions you have about income tax, Making Tax Digital for Income Tax Self-Assessment obligations and record keeping or the transition period.

To arrange an informal chat, contact Martin Kerr.

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