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ITSA Software Choices: Key Considerations

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ITSA Software Choices: Key Considerations

Making Tax Digital is a UK government proposal to digitize the tax system, making it more straightforward for individuals and businesses to manage their tax affairs. 

The initiative involves regularly recording financial data in MTD-compatible software and reporting figures quarterly to HMRC. MTD has already impacted VAT and will soon affect Income Tax and Corporation Tax. 

From 1 April 2022, all tax-registered businesses, regardless of turnover, must comply with Making Tax Digital for VAT rules. Companies must maintain digital VAT records using MTD-compliant software and send quarterly VAT returns electronically to HMRC. The initiative aims to prevent basic mistakes that cause disruption for taxpayers and cost the government billions of pounds a year in lost revenue. VAT accountants can help in this regard.

How about a digital tax self-assessment?

MTD for ITSA has been delayed a year due to COVID-19 and stakeholder appeals. It will now be presented on 6 April 2026. Self-employed sole traders with taxable income over £50,000 must comply with MTD for ITSA requirements. 

MTD for Income Tax Self-Assessment is available to UK residents registered for Self-Assessment with current returns and payments. They must use MTD-compatible software to keep digital financial records of their income and expenses or find an MTD-compliant alternative.

MTD for ITSA Reporting Process

To comply with MTD for ITSA, you must update your digital financial records regularly using MTD-compliant software and submit quarterly figures to HMRC via your digital account, with a final declaration at the end of the tax year. Late submissions may result in fines. 

MTD-compliant software can also help you budget for tax payments. Accountants in High Wycombe offer Self-Assessment filing to make the process easier, with an option to have your tax return checked by an expert.

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