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Joining the MTD for Income Tax Private Beta: What You Need to Know (July 2024 onward)

10th Jul 2024
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With less than two years before Making Tax Digital for Income Tax is a legal requirement, Sage is one of just a handful of vendors ready to help you and eligible clients make the move today.

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Is it time to start exploring the very real implications of moving sole trader, freelance, side-hustling and other types of income tax clients over to Making Tax Digital for Income Tax?

Only you can answer that question but the learnings from MTD for VAT are clear: Those that came late to the party struggled with basic issues such as getting support from HMRC (already difficult at the best of times, but the phone lines were effectively jammed as the MTD for VAT deadline approached).

Allowing time for mistakes, confusion and unforeseen circumstances is a wise move. Start moving clients over to Making Tax Digital for Income Tax right now, and you'll be better prepared.

Here's all you need to know, and do.

What is MTD for Income Tax?

MTD for Income Tax is part of the evolution of HMRC’s wider Making Tax Digital programme, which was first announced in 2015 as part of the government’s intention to digitalise and eventually replace the self assessment tax return.

MTD for VAT was the first element of the programme to become a legal requirement, beginning in April 2019.

MTD for Income Tax will specifically require self-employed individuals and landlords with annual business or property turnover above the mandation limit to keep digital records and use compatible software to send quarterly updates to HMRC, followed by an end-of-year final declaration.

Making Tax Digital for Income Tax is also sometimes referred to as Making Tax Digital for Income Tax Self Assessment (MTD ITSA), or (increasingly) MTD IT.

Why join the MTD for Income Tax Private Beta?

HMRC’s MTD initiative aims to streamline and modernise the process of income tax self assessment for millions of taxpayers and accountants alike. HMRC’s recent announcement signals the beginning of the private beta scheme for MTD for Income Tax, which began on the 22nd of April 2024. This beta phase allows you to test the new system before it becomes mandatory for all taxpayers above the mandation thresholds.

The regulations say that those with self-employment income and/or property income (combined) of more than £50k will be mandated from April 2026 and those with more than £30k from April 2027.

HMRC has said that they want to keep the numbers relatively low on the private beta to ensure they can give the best support to overcome any issues raised.  Once they move into the public beta from April 2025, accountants should be ready to have more clients on the testing to ensure they are ready for mandation from April 2026.

By participating in the private beta, you can familiarise yourself with the new digital processes, identify any potential challenges, and streamline your workflows for future compliance.

Here’s why you should consider getting your eligible clients onboard:

  1. HMRC has set up a dedicated support team for MTD for Income Tax. The team are dedicated to the MTD for Income Tax Beta and they ONLY support those taxpayers and agents in the beta. HMRC has confirmed that these dedicated agents can also support the taxpayer, or their agent, with some of their wider personal tax affairs (individual PAYE and Self Assessment matters) for the 2024 to 2025 financial year.
  2. Be ahead of the curve: Early participation allows you to familiarise yourself with the Making Tax Digital for Income Tax system, identify potential challenges, and develop best practices for smooth implementation.
  3. Influence development: Your feedback as an early user is crucial in shaping the final product. This is your chance to voice any concerns or suggestions to improve the system.
  4. Enhanced client service: Offering participation in the beta testing to your clients demonstrates your proactive approach to managing their tax affairs, enhancing your reputation as a forward-thinking and client-focused professional.

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Eligibility and how to sign up

Before signing up your clients, ensure they meet the eligibility criteria set by HMRC. Here are the key points you need to know:

  • Agent services account: To sign up clients, you must have an Agent Services Account. If you don’t have one, you’ll need to set it up on the HMRC website.
  • Client eligibility: Clients must be UK residents, have an accounting period aligned with the tax year, and have submitted at least one Self-Assessment tax return. Additionally, they should not be using the annual accounting scheme for VAT or have income from certain sources like Lloyd’s underwriters or trusts.

For detailed eligibility criteria and the sign-up process, visit the HMRC guidance page.

How Sage can help

Sage is proud to be one of just seven vendors ready to support accountants during this private beta-testing phase. We understand the challenges of transitioning to a new system and are committed to providing the tools and resources you need to succeed. We’ll work with your practice and clients and also HMRC to make sure that any issues are identified and that things go smoothly.

Here’s how Sage can assist you:

  • Comprehensive support: Our dedicated team is available to help you navigate the sign-up process, troubleshoot issues, and provide ongoing support throughout the beta testing period.
  • Educational resources: Access a wealth of resources, including webinars, tutorials, and documentation, designed to help you and your clients understand and benefit from the MTD ITSA system.
  • Early access to updates: Stay ahead with early access to software updates and features tailored to enhance your experience with MTD for Income Tax.

How to get started

If you don't want to enter a client into the pilot or don’t have any eligible clients, you may still wish to work with Sage on our solutions, keep up to date with our latest content, or have a line to HMRC. We can also provide a 'light touch' pilot where accountants and bookkeepers don't have to have a client participate, but can still work with us on our products and solutions. If this would be of interest, please speak to your usual Sage contact.

Looking ahead to 2025

Participating in the MTD for Income Tax private beta testing is not just about being compliant with future regulations; it’s about embracing innovation and enhancing your practice. By gaining early access and experience, you position yourself as a leader in the industry, ready to guide your clients through the digital transformation of tax reporting

As the mandatory rollout in April 2026 approaches, the insights and experience gained from the private beta will prove invaluable. Don’t miss this opportunity to be a part of the future of tax reporting. Sign up your eligible clients today, and let Sage help you every step of the way.

For more information and to sign up for the MTD ITSA private beta testing, visit the HMRC guidance page and read our detailed blog about the MTD for Income Tax and the private Beta on the Sage website.

 

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