ICAEW’s Anita Monteith and Caroline Miskin were joined by HMRC for the April 2022 edition of MTDtalk (recording available).

Topics covered included:

• MTD ITSA - who's in and the £10,000 threshold;
• MTD ITSA pilot expansion - who can join; and
• what can be done now to prepare.

Attendees also had the opportunity for their questions to be answered by the panel.

The MTDtalk series builds on the November 2021 webinar, which covered the Making Tax Digital income tax self assessment (MTD ITSA) regulations in detail.

Following the latest MTDtalk, ICAEW’s Tax Faculty developed a list of MTD ITSA frequently asked questions. This has been added to ICAEW’s MTD hub.

MTD ITSA pilot

It is possible to join the MTD ITSA pilot, although it is not being actively promoted by HMRC.

To do so, the taxpayer must maintain digital records and have acquired MTD compatible software. For now, sign up is available only via a software developer.

Taxpayers can join the pilot if:

• their accounting period aligns exactly with the tax year (not 31 March);
• they are UK tax resident;
• they are registered for self assessment and have submitted at least one return;
• everything is up to date (eg, no outstanding liabilities or ongoing time to pay arrangement);
• their non-MTD income and claims are on the evolving list for which functionality has been developed (current version below); and
• they pass HMRC’s check against a whitelist of taxpayers that are eligible to join.

The current list of available functionality includes:

• employment income;
• UK dividends;
• UK bank and building society interest;
• Gift aid relief claims;
• Construction Industry Scheme deductions;
• Pension income;
• Private pension contributions relief claims;
• Student loan repayments deducted through PAYE;
• Self-employed and student loan repayment to make;
• Additional information previously included in the SA101;
• Foreign income (including bank and building society interest and dividends);
• Voluntary class 2 national insurance contributions;
• Recipients of transferable marriage allowance; and
• Capital gains tax reporting

The pilot currently remains very limited. HMRC has indicated that it expects tens of thousands to join the pilot in 2022/23 and hundreds of thousands in 2023/24.

Next steps

Further tertiary legislation (MTD notices) is expected in the coming months. This will provide some of the missing detail including, for example, the categories into which transactions must be summarised for submission to HMRC.

ICAEW continues to press HMRC for answers on the many other areas requiring clarification. This includes how MTD ITSA will accommodate basis period reform.