MTD for Income Tax

The next phase of HMRC’s plan for digitising the UK tax system comes into force from April 2024 with the introduction of Making Tax Digital for Income Tax and Self Assessment (MTD for ITSA).

From that date, certain individuals who earn £10,000 or more a year will be required to comply with the MTD ITSA regulations. These individuals will fall into one or both of the following categories:

  • sole traders who run unincorporated businesses; and/or
  • property landlords.

These taxpayers will have to use MTD compatible software which can be either:

  • bridging software which allows them to link their records from Excel direct into HMRC’s MTD platform;
  • or end to end accounting package.

For those with very simple accounting needs or who currently use Excel spreadsheets to log their income and expenditure, by far the cheapest and simplest option to use is bridging software.

We have created an MTD and Bridging Software fact sheet which provides a true and accurate account of the long term use of bridging software to comply with MTD.

Change of accounting period date

Also from April 2024, unincorporated businesses including the self-employed, partnerships and property landlords, will have to align their accounting year with that of the tax year. This change of the basis period for calculating tax is aimed at making it simpler for business owners and individuals to calculate what tax is due. However, there could be financial consequences for taxpayers depending on when and how they change their accounting date.

Absolute have developed the Taxpert MTD Basis Period App which identifies the options available to taxpayers if they have to change their accounting date.

Absolute’s MTD for Income Tax Bridging Software

Absolute Software are working closely with HMRC to develop bridging software to comply with MTD for ITSA.

This is still a work in progress; however, we have put together this short video to give you an insight into how our MTD for Income Tax bridging software will work. As you will see from the video the software will be simple to use and will encompass all the income streams which taxpayers will have to report when making their quarterly returns. You can watch the video here.

MTD Income Tax Filer software updates

To receive updates on our new MTD for Income Tax bridging software please register your interest with Dave Frost at or call 01869 255797.