
New tax year: Key changes and initiatives for 2025/26
How is your business impacted by the new tax year measures? Learn about the changes and what actions to take.
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Making Tax Digital for Income Tax applies to self-employed individuals and landlords with a total annual income of more than £50,000 from these income sources for a tax year.
Mandated businesses will be required to use MTD compatible software to keep digital records and submit quarterly summaries of income and expenses. In addition to this, mandated businesses will also need to submit a tax return to declare additional income sources such as interest and dividends, make tax adjustments and to make a ‘Final Declaration’ to confirm the information provided is complete and accurate.
Making Tax Digital for Income Tax applies to self-employed individuals and landlords with a total annual income of between £30,000 and £50,000 for a tax year.
Mandated businesses will be required to use MTD compatible software to keep digital records and submit quarterly summaries of income and expenses. In addition to this, mandated businesses will also need to submit a tax return to declare additional income sources such as interest and dividends, make tax adjustments and to make a ‘Final Declaration’ to confirm the information provided is complete and accurate.
Understand the impact of MTD on your practice and clients, the services you will provide, and how you will communicate and deliver your plan.
Meet all the requirements for MTD for Income Tax with solutions for every client, relationship, and workflow. Get digital records, automated data entry, tax categorisation, quarterly reporting, and end of year tax submissions.
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Making Tax Digital for Income Tax is a new way of reporting income and expenses which will replace the Self Assessment returns for sole traders and landlords.
It will require the taxpayer or their agent to:
There are the upcoming dates to take note of:
There are also a number of future dates on the HMRC timeline to be confirmed for MTD for Income Tax Self Assessment:
HMRC have launched a ‘private beta’ for tax year 2024/25 and are currently encouraging agents to sign up, however it is also possible for taxpayers to sign up directly.
To be eligible for private beta, you (or your client) must:
For more information on those that cannot sign up voluntarily and things to consider read our article https://www.sage.com/en-gb/blog/mtd-for-itsa/
First you’ll need to identify which clients are impacted by MTD for Income Tax and discuss these changes with every client.
If you think a client would make a good candidate for the 2024/25 private beta testing, make sure to step them through the process and explain the implications of joining the voluntary programme.
Once you’ve talked them through it, make sure to get their consent. You will need this consent before you begin moving forward with the registration process below.
All agents need an Agent Services Account (ASA) to be able to access MTD services and make submissions on behalf of their clients. Think of this as similar to the Government Gateway login.
You will only need one ASA for your firm. Once you have one you can set up your staff with administrator or assistant logins to use the account.
Your firm may already have signed up for an ASA when you registered to submit MTD for VAT returns or Trust Registration Service returns.
The next step is to ensure you have compatible accounting software to be able to submit quarterly updates on behalf of your clients.
Sage Accounting is currently one of the few products on the HMRC list of approved providers that is ready to use right now if you wish to sign up clients for beta testing.
https://www.sage.com/en-gb/making-tax-digital/mtd-vat-software/
Once you have MTD compatible software you can sign up eligible clients for MTD for Income Tax. Here is the information you’ll need for the sign-up process:
Once completed you’ll need to provide the client’s authorisation.
You can do this either by signing in to the Agent Services Account and following the steps, or you can copy over the client’s existing authorisation for self assessment from your HMRC online services for agents account to the ASA.
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Talk to our experts or sign up to Sage for Accountants today.