MTD for ITSA Expands in April 2028- What Accountants Need to Know? 

HMRC won’t provide an online service to file the year-end return for MTD ITSA- what now?  

Rachel Reeves’s Spring Statement which was meant for economic updates surprised the UK with buried details on tax measures including an important update on Making Tax Digital for Income Tax (MTD ITSA).  

April 2028 has been confirmed to bring major changes for MTD ITSA including the reduced income threshold of £20,000, new exemptions and deferrals. Additionally, April 2028 onwards HMRC will not provide an online service for filing year-end returns under MTD.  

So, what does it means for Accountants? Let’s explore.  

MTD ITSA: £20K Threshold from April 2028 

At the 2024 Autumn Budget, the government signalled its commitment to Making Tax Digital (MTD) mandatory for those with qualifying income above £20,000 by the end of this Parliament (summer 2029). This was confirmed with the Spring 2025 statement which made this requirement mandatory from April 2028.  

Also, the government has indicated that it will explore ways to extend MTD requirements for 4 million sole traders and landlords with earnings below £20,000.  

To comply with this new requirement and handle the digital transition, accountants and tax advisers should equip themselves with the right digital tools and software.  

MTD ITSA: Key Exemptions & Deferrals Accountants Must Know 

As the April phase for MTD ITSA (April 2026) approaches, the government has announced new exemptions and deferrals.  

Who is Exempt from MTD ITSA? 

The Spring Statement 2025 confirms that the following groups will be exempt.  

• Taxpayers with power of attorney 

• Non-UK resident entertainers and sportspeople 

• Taxpayers for whom HMRC cannot provide a digital service 

The first two exemptions are straightforward and sensible. However, the third one is unclear. HMRC has stated that affected individuals must “notify and satisfy” them to qualify for exemption. Hopefully, HMRC will make further announcements for more clarification on this topic.  

What Are the Temporary Deferrals Announced? 

Alongside the exemptions, following temporary deferrals for MTD ITSA have also been announced. 

• Ministers of religion, Lloyd’s underwriters, and recipients of the Married Couples Allowance or Blind Person Allowance are not required to comply with MTD ITSA during this Parliament (until summer 2029) 

• Taxpayers who file an SA109 (residence/remittance basis) won’t have to comply until April 2027 

While these exemptions and deferrals ease the transition, accountants must be careful and prepare for potential complexities, especially for non-residents with higher incomes. They may still be required to join MTD in 2026.  

MTD ITSA: Full Software Requirement Confirmed For 2028 

HMRC has confirmed the unavailability of its online services for year-end tax returns under MTD ITSA starting April 2028. This means all the accountants must use third-party software to file Self Assessment Tax Returns for taxpayers with qualifying income above £20,000.  

While lots of HMRC approved software are available online to keep digital records of income and expenses, not all of them support year-end filing.  

This gives every accountant the responsibility of ensuring their clients have compatible solutions to avoid compliance issues.  

With the MTD deadlines approaching, now is the best time to review software choices, make digital transition and stay ahead of competition. 

No HMRC Online Filing for Year End 

With HMRC making their online service for filing year-end returns for MTD ITSA unavailable, Accountants have two options:  

• Acquire software capable of both quarterly and year-end filings, or  

• Use two separate software packages and advice client the same 

Accountants must ensure whichever the software they choose meet the needs of clients especially with niche income. Also, Accountants must be aware of both quality and cost of software solutions as software pricing could be the problem for lower income taxpayers.  

The Association of Taxation Technicians (ATT) has raised the same concerns with HMRC and Exchequer Secretary of the Treasury regarding the software journey. The exemptions and deferrals provided are meant to address some of these issues.  

Either way, Accountant must stay proactive in evaluating available software, ensuring regulatory compliance and the needs and expectations of clients.  

Conclusion 

The software journey towards the digitalisation of tax under MTD ITSA can be challenging for Accountants. On top of that, the announcement from HMRC regarding the unavailability of HMRC online services for MTD ITSA raises several concerns among Tax Advisors and Accountants regarding availability, affordability and reliability of HMRC compliant software.  

In this situation, it is important for Accountant to stay calm, informed and review several software choices on the market.  

Last but not the least, stay informed, stay prepared and stay ahead.