MTD ITSA Reporting Requirements from April 2024
09/07/2022 - 10 minutes readMTD ITSA Reporting requirements from April 2024 have been confirmed by HMRC in the draft legislation published last week.
Making Tax Digital (MTD) for Income Tax will apply to relevant persons (unincorporated businesses and landlords) with business and/or property income over £10,000.
The Income Tax (Digital Requirements) Regulations 2021 (SI 2021 No 1076) set out the requirements that relevant persons must comply with under MTD for Income Tax. These include the use of MTD-compatible software to keep and preserve their business records (business income and expenses) digitally, send quarterly updates of their records to HMRC, and submit an end-of-period statement to HMRC.
HMRC’s draft notices for MTD ITSA Reporting requirements confirm that there are five different types of quarterly updates depending upon the type of business:
- Businesses with trade profits
- Businesses with property income (not UK or EEA furnished holiday lets (FHL))
- Overseas property (not EEA FHL)
- UK FHL
- EEA FHL
We discuss MTD ITSA in further detail here.
MTD ITSA Reporting Requirements
Businesses with trade profits (income chargeable under Part 2 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA))
A relevant person with trading income must provide the following update information in each quarterly update:
- – quarterly period start date
- – quarterly period end date
- – totals of the amounts falling within the categories of transactions set out in the following table:
| Transactions that lead to business income | Transactions that lead to business expenses |
|---|---|
| Turnover | Cost of goods bought for resale or goods used |
| Other business income | Construction industry – payments to subcontractors |
| Wages, salaries, and other staff costs | |
| Car, van, and travel expenses | |
| Rent, rates, power, and insurance costs | |
| Repairs and maintenance of property and equipment | |
| Phone, fax, stationery, and other office costs | |
| Advertising and business entertainment costs | |
| Interest on bank and other loans | |
| Bank, credit card and other financial charges | |
| Irrecoverable debts written off | |
| Accountancy, legal and other professional fees | |
| Depreciation and loss or profit on sale of assets | |
| Other business expenses |
Businesses with property income (income chargeable under Part 3 of ITTOIA
A relevant person with property income must provide the following update information in each quarterly update:
- – quarterly period start date
- – quarterly period end date
- – totals of the amounts falling within the categories of transactions set out in the following table:
UK property (not UK or EEA Furnished Holiday Let (FHL))
| Transactions that lead to property income | Transactions that lead to property expenses |
|---|---|
| Total rents | Rent, rates, insurance, ground rents |
| Other income | Property repairs and maintenance |
| Tax taken from total rents and other income from property | Residential property finance costs |
| Premiums for the grant of a lease | Non-residential property finance costs |
| Reverse premiums and inducements | Legal, management and other professional fees |
| Costs of services provided, including wages | |
| Other allowable property expenses |
Overseas property (not EEA FHL)
| Transactions that lead to property income | Transactions that lead to property expenses |
|---|---|
| Total rents | Rent, rates, insurance, ground rents |
| Premiums paid for the grant of a lease | Property repairs and maintenance |
| Other receipts | Residential property finance costs |
| Non-residential property finance costs | |
| Legal, management and other professional fees | |
| Costs of services provided, including wages | |
| Other allowable property expenses |
UK FHL
| Transactions that lead to property income | Transactions that lead to property expenses |
|---|---|
| Rent received | Rent paid, repairs insurance and costs of services provided |
| Income from any services provided to tenants | Loan interest and other financial costs |
| Legal, management and other professional fees | |
| Other allowable property expenses |
EEA FHL
| Transactions that lead to property income | Transactions that lead to property expenses |
|---|---|
| Rent received | Rent paid, repairs insurance and costs of services provided |
| Loan interest and other financial costs | |
| Legal, management and other professional fees | |
| Other allowable property expenses |
Turnover below the VAT registration threshold
A relevant person with an annual turnover below the VAT registration threshold, as amended from time to time, may choose to provide the total of all income and the total of all expenses instead of the totals of the amounts falling within each category of transaction listed in Hmrc’s draft notice.
MTD ITSA Reporting requirements for End of Period Notice – made further to regulation 12
The End of Period information that must be provided in an End of Period Statement (EOPS) is dependent on the relevant person’s business or businesses.
A relevant person must provide the following End of Period information in the EOPS:
- – the totals of the amounts falling within the applicable categories of transactions detailed the Update Notice
- – the additional information set out at this End of Period Notice
Where a relevant person has not already decided whether the amounts included in each expense category of a transaction set out in the Update Notice include any elements which are disallowable, the relevant person must remove any disallowable expenditure prior to providing the EOPS total for the relevant period.
MTD ITSA Reporting requirements for Additional End of Period information to be provided in the EOPS
Businesses with Trade Profits (income chargeable to Part 2 of ITTOIA)
A relevant person with trading income must provide totals of the amounts falling within the following categories:
- – Annual Investment Allowance
- – capital allowances for main pool costs
- – capital allowances for special pool costs
- – capital allowances for single asset pool costs
- – zero-emission goods vehicle allowance
- – customers’ Premises Renovation Allowance
- – 100% and other enhanced capital allowances
- – allowances on sale or cessation of customer use
- – balancing charge on sale or cessation of customers’ use (only where Customers’ Premises Renovation Allowance has been claimed)
- – balancing charge on sales of other assets or on the cessation of customer use
- – adjustment for change of accounting practice
- – averaging adjustment
- – adjusted profit or loss for the year
- – adjustment to profits chargeable to Class 4 National Insurance contributions
- – zero-emissions car allowance
- – electric charge point allowance
- – structures and buildings allowance
- – (Freeport) enhanced Structured Building Allowance (SBA)
Businesses with Property Income (income chargeable under Part 3 of ITTOIA)
A relevant person with property income must provide totals of the amounts falling within the following categories set out below:
- – UK property (not UK FHL or EEA FHL):
- – private use adjustment
- – balancing charges
- – annual investment allowance
- – customers’ Premises Renovation Allowance
- – zero-emission good vehicle allowance
- – other capital allowances
- – cost of replacing domestic items
- – rent a room exempt amount
- – loss brought forward used against this year’s profits
- – adjusted profit or loss for the year
- – property income allowance
- – zero-emissions car allowance
- – electric charge point allowance
- – structures and buildings allowance
- – (Freeport) enhanced Structured Building Allowance (SBA)
- – Overseas Property (not EEA FHL):
- – private use adjustment
- – balancing charges
- – capital allowances for equipment and vehicles
- – zero-emission goods vehicle allowance
- – cost of replacing domestic items
- – adjusted profit or loss for the year
- – UK FHL:
- – private use adjustment
- – balancing charges
- – capital allowances
- – adjusted profit or loss for the year
- – EEA FHL:
- – private use adjustment
- – balancing charges
- – capital allowances
- – adjusted profit or loss for the year
Turnover below the VAT registration threshold
A relevant person with an annual turnover below the VAT registration threshold, as amended from time to time, may choose to provide the total of all income and the total of all expenses instead of the totals of the amounts falling within each category of transaction listed in the Update Notice.
MTD ITSA Reporting requirements for Retail sales notice – made further to regulation 16
In respect of the retail sales of the business of a retailer digital records means a single digital record of the daily gross takings for any retail sales made.
The gross daily retail sales digital record must include:
- – all payments as they are received by the relevant person or on the relevant person’s behalf from its own cash-paying retail consumers. This includes payments by cheque, debit or credit card, maestro, visa or similar electronic transactions and electronic cash
- – the full value of all credit or other non-cash retail sales received by the relevant person or on the relevant person’s behalf. This includes the full value of credit sales, the cash value of payment in kind for retail sales, the face value of the gift, book and record vouchers received and any other payments for retail sales including those sales completed via third-party online sales platforms
The following may be excluded when calculating the amount of daily gross takings:
- – counterfeit notes
- – illegible credit card transactions
- – inadvertent acceptance of a cheque guarantee card as a credit card
- – inadvertent acceptance of foreign currency (where discovered after their acceptance)
- – inadvertent acceptance of out-of-date coupons which are not honoured by promoters
- – instalments in respect of credit sales
- – receipts recording for supplies which are to be recorded outside of the election
- – refunds to a consumer for overcharges or faulty/unsuitable goods
- – float discrepancies
- – unsigned or dishonoured cheques from cash customers
- – use of training tills
- – void transactions
Further details of MTD ITSA Reporting Requirements can be found on the gov.uk website.
How can MCL Accountants help?
Contact MCL Accountants Southend on 01702 593 029 if you have any queries regarding MTD ITSA Reporting requirements or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.
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Ishan provides financial management, taxation and transactional advice to business entities of all sizes. His expert areas include statutory compliance, business taxation, personal tax & transactional processing and systems. Industry sectors include professional services, retail, hospitality and entertaining & media and advertising services.
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