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MTD for Income Tax and Basis Periods

All the tricky issues explained

A PDF Report about...

In a nutshell

This PDF Report considers the changes businesses must make to prepare for the move to digital tax reporting. It analyses what’s required by law, highlights the opportunities, and shows how to take advantage of them.

In detail

If you’re in business as a sole trader, partnership or landlord, Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) will change the way you report your income to HMRC and how you work out your business profits.

Transition to the new system starts in 2023 and you must be fully ready by April 2024. Our brand new PDF Report, created by MTD experts, explains exactly what the changes are and how you can easily implement them in your business. Written in plain English with real-life examples, it includes all the information you need to ensure you’re properly prepared for MTD ITSA. It explains:

  • Who must use MTD ITSA
  • The timetable for implementing it
  • How to make your business recording systems compatible
  • The new quarterly and annual digital reporting requirements
  • The basis period transitional rules
  • How all these changes will affect your tax bills

The PDF Report is packed with realistic tips and practical examples to help you navigate your way successfully through MTD ITSA, without having to run up huge bills with your accountant.

We've created this PDF Report especially for... 

Everyone in business as a sole trader, partnership or landlord that wants to:

  • Be fully prepared for the move to digital tax reporting
  • Know how to implement the changes in their business
  • Successfully navigate their way through MTD ITSA

Tax advisors and accountants that want to:

  • Be able to advise their clients on the upcoming changes
  • Have all the latest advice and information on MTD ITSA to hand

In this PDF Report you'll read about...

1. Introduction

1.1. What’s the purpose of MTD?

1.2. What is the timetable for MTD?

2. Timetable and scope

2.1. How will MTD ITSA affect my business?

2.2. When will MTD ITSA start for my business?

3. Key changes

3.1. Are MTD ITSA requirements the same as those for MTDfV?

3.2. How will MTD ITSA change self-assessment reporting?

3.3. What will the HMRC reporting requirements be?

3.4. Are there any advantages to MTD ITSA?

3.5. What’s in it for HMRC?

3.6. What checks will HMRC make?

3.7. What steps can I take to avoid trouble with HMRC?

4. Joining and leaving

4.1. Who doesn’t MTD ITSA apply to?

4.2. When does MTD ITSA apply to sole traders and landlords?

4.3. What counts as qualifying income?

4.4. If my business is new when am I required to start using MTD ITSA?

4.5. What are the rules for qualifying income from abroad?

4.6. What exemptions from MTD ITSA are there?

4.7. Examples of when exemption might apply

4.8. When can I leave MTD ITSA?

4.9. Is there a way to dodge or defer MTD ITSA?

4.10. How should I prepare for MTD ITSA?

4.11. How do I sign up?

4.12. Can I use the MTD ITSA pilot?

4.13. Will HMRC automatically include me in MTD ITSA?

5. Reporting requirements

5.1. Quarterly submissions: what are they and how are they made?

5.2. How are quarterly submissions made if I have multiple sources of income?

5.3. What information do I have to provide in my reports?

5.4. What are the categories for transactions?

5.5. How accurate do the reports have to be?

5.6. What if I make a mistake?

5.7. What action will HMRC take after receiving a report from me?

5.8. How accurate will HMRC’s tax calculation be?

5.9. What is the EOPS?

5.10. When must I submit my EOPS?

5.11. What information must be included in my EOPS?

5.12. How can I amend my EOPS?

5.13. Can HMRC amend an EOPS?

5.14. When do I make my final declaration?

6. Deadlines

6.1. What steps can I take to make MTD ITSA easier?

6.2. What periods will the quarterly submissions cover?

6.3. When must I file my quarterly reports?

6.4. Are there any other options?

6.5. What are the quarterly deadlines for calendar quarters?

6.6. What are the other deadlines to watch?

6.7. Will MTD ITSA change when my tax is payable?

6.8. Where can I find more information about deadlines and reporting periods?

7. Record keeping requirements

7.1. What are the basic MTD ITSA record keeping rules?

7.2. What information must be recorded digitally?

7.3. Are there special rules for property rental businesses?

7.4. Is any manual record keeping allowed?

7.5. At what point must transactions be recorded digitally?

7.6. Should I use a bookkeeper or accountant?

7.7. What are the requirements for MTD-compatible software?

7.8. Is there any free software?

7.9. What are the current accounting and record keeping options?

7.10. How does cash accounting work?

7.11. How does accruals accounting work?

7.12. What are “simplified expenses”?

7.13. Which method will suit me?

7.14. How do I start using the cash basis?

7.15. Cash basis: is it right for me?

7.16. How does cash accounting fit with MTD ITSA?

7.17. What if I can’t use cash accounting?

7.18. How does accruals accounting fit with MTD ITSA?

7.19. Summary of accounting methods and MTD ITSA

7.20. What are the basic digital requirements?

7.21. Should I use cloud-based bookkeeping software?

7.22. How much bookkeeping do I need to do?

7.23. Is digital record keeping sufficient for MTD ITSA?

7.24. When will compatible software be available?

7.25. Are there special record keeping solutions for cash accounting?

7.26. Can I create and use my own spreadsheet?

7.27. How does a spreadsheet transfer the data to HMRC?

7.28. Is there a simple software alternative to spreadsheets?

7.29. What other factors should I consider?

7.30. What software should I consider if I use accruals accounting?

7.31. How soon should I start preparing my record keeping for MTD ITSA?

8. Tax basis periods reform

8.1. What’s changing?

8.2. What are tax basis periods?

8.3. What is the basis period reform?

8.4. How will it impact my business accounts and tax?

8.5. How will the basis period reform affect property rent businesses?

8.6. When will it happen?

8.7. What is overlap relief and transitional profit spreading?

8.8. How will profits be worked out after the transition year (2023/24)?

8.9. What complications result from an accounting year that doesn’t coincide with the tax year?

8.10. How can I change my accounting year end?

8.11. When should I make a change of accounting date?

8.12. Is there an optimum time to change accounting date?

9. Calculating tax under MTD ITSA

9.1. Will MTD ITSA mean an end to self-assessment?

9.2. Will I know sooner and more accurately about my tax bills?

9.3. When will I know what I owe?

9.4. Can I match quarterly estimates and annual bills?

9.5. How should I budget for my tax?

10. MTD ITSA at a glance

10.1. Where does my business fit in?

10.2. The basics: what’s it all about and what do I have to do?

10.3. Who does MTD ITSA apply to?

10.4. Joining MTD ITSA

10.5. Quarterly submissions and end of year procedures

10.6. Deadlines

10.7. Records and MTD ITSA

10.8. Why the business accounting year-end matters

10.9. MTD ITSA and tax bills

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