Author: Debonair Management Services Limted

Welcome Debonair Management Services Limited is a small, dynamic and personal firm of accountants, with a record over more than twenty five years of offering prompt, efficient service and useful advice. Our services range from bookkeeping to the preparation of year end accounts for sole traders, partnerships and small limited companies. We specialise in the setup of SAGE computerised accounting systems and offer full support to our clients. Above all else we pride ourselves on our friendly, approachable service, our constructive solutions to client’s issues and our competitive fees.
DMS Posts

Companies House fees

Debonair Management Services Limted

1. Company incorporation and registration fees

Company incorporation and registrationOnlineSoftwarePaper
Incorporation£50£50£71
Same day incorporation £78 
Change of name£20£20£30
Same day change of name£83£83 
Re-registration  £71
Confirmation statement fee (with your first statement in the 12 month payment period)£34£34£62
Voluntary strike off£33 £44
Registration of a charge£15£15£24
Reduction of capital by solvency statement  £33
Same day reduction of capital by solvency statement (upload service only)  £136
Reduction of capital by court order  £33
Administrative restoration  £468
Application to make an address unavailable for public inspectionPaper
By an individual£30
By the company: for any list of members in hard copy form (not a long list)£30
By the company: for any list of members filed digitally (not a long list)£30
By the company: for a long list of members delivered on CD-ROM or DVD-ROM£30
By the company: for a long list of members in hard copy form£30
By a person who registers a charge£30

Fee charged for each document suppressed.

2. Limited liability partnership (LLP) incorporation and registration fees

Limited liability partnership (LLP)OnlineSoftwarePaper
Incorporation of an LLP £50£71
Same day incorporation of an LLP £78 
LLP confirmation statement fee (with your first statement in the 12 month payment period)£34£34£62
LLP change of name £20£30
Same day LLP change of name £83 
LLP voluntary strike off£33 £44
Registration of a charge by an LLP£15£15£24
Administrative restoration of an LLP  £468
Application to make an address unavailable for public inspectionPaper
By an individual LLP member£30
By a person who registers a charge£30

Fee charged for each document suppressed.

3. Overseas company incorporation and registration fees

Overseas companyOnlineSoftwarePaper
Registration of a UK establishment of an overseas company  £71
Change of corporate name or alternative name of an overseas company  £30
Annual document processing fee payable with the overseas company accounts  £62

4. Register of Overseas Entities (ROE)

ROE serviceOnlinePaper
Registration of an overseas entity£234£467
Annual update fee£234£467
Application for removal£706£940

5. EEIG establishments and UK Economic Interest Groupings (UKEIGs) fees

EEIG establishments and UKEIGsPaper
Registration of UK establishment of an EEIG whose official address is outside the UK under regulation 12£71
Change of name of an UKEIG£30
Registration of charge£24

6. UK Societas fees

UK SocietasPaper
Conversion of a UK Societas to a PLC£71

7. Community interest company (CIC) and other incorporation types

Community interest company (CIC)OnlineSoftwarePaper
Registration of a CIC in accordance with section 36 of the Companies (Audit, Investigations and Community Enterprise) Act 2004£65£65£86
Conversion of a limited company to a CIC  £45
Other incorporation typesPaper
Registration of a company authorised to register in accordance with section 1040 of the Companies Act 2006£71
Registration of an unlimited company in accordance with section 14 of the Companies Act 2006£71

8. Application for protection

Application for protectionFee
Section 243 application to make protected usual residential address information unavailable to credit reference agencies£100
Section 790ZF application to make protected usual residential address information of a Person with Significant Control (PSC) unavailable to credit reference agencies£100
Section 790ZG application requiring the registrar to refrain from disclosing secured PSC information£100
Combined Section 790ZF and Section 790ZG application£100
Section 790ZF application by a Section 243 beneficiary£15
Section 243 application by a Section 790ZF beneficiary£15
Application for higher protection in respect of an overseas company£100
Application to make information relating to a relevant individual of an overseas entity unavailable for public inspection£100

9. Limited partnership (LP) incorporation fees

Limited partnership (LP)Paper
Registration of a limited partnership£71

10. Private fund limited partnership (LP) incorporation fees

Private fund LPPaper
Designation as a private fund LP (after the LP has been registered)£10

11. Scottish qualifying partnership fees

Scottish qualifying partnershipsPaper
Registration of a Scottish qualifying partnership£71
Annual fee for documents delivered during a confirmation statement period£62

12. Scottish limited partnership fees

Scottish limited partnershipsPaper
Registration of a Scottish limited partnership£71
Annual fee for documents delivered during a confirmation statement period£62

13. Scottish partnership protection fees

Application for protectionPaper
Making an application under Regulations 48,49 or 50 of the Scottish Partnership PSC Regulations requiring the registrar to refrain from disclosing secure information in relation to the applicant to an individual to whom the application applies£100
Making an application by a specified public authority under Regulation 42(2) of the Scottish Partnership PSC regulations for the registrar to determine whether to disclose URA information to that authority£54
Making an application by a specified public authority under Regulation 1087B (2) of the Companies Act modified by Regulation 63 of the Scottish Partnership PSC regulations for the registrar to determine whether to disclose restricted DOB information to that authority£54

14. Extractives filing service fees

Extractives filing serviceOnline
Registration of a report on payments to governments£250

15. Contact centre search fees

Screen printsFee
Alpha index, dissolved companies, former names (per page) by email£2
Company appointments by email£3
Mortgage details by email£3
Company reportsFee
Current appointments report by email£3
Mortgage statement by email£3
Company record by email£3
Document imagesFee
Copy of company document by email (after 1995)£3
Company, limited partnership or Scottish qualifying partnership documentsFee
Copy of company document (not a long list of members) by email£3
Hard copy of document not on microfiche by post£9
Certified copiesFee
Certified copy of document by post£15
Same day certified copy of document by post£50
Certificates of incorporationFee
By post£15
Same day certificate of Incorporation by post£50
Additional certificate (for same company) by post£10
Private fund limited partnerships only certificates of designationFee
By post£15
Same day certificate of designation by post£50
Additional certificate (for same company) by post£10
Private fund limited partnerships only combined certificate of registration and designationFee
By post£15
Same day certificate of designation by post£50
Additional certificate (for same company) by post£10
Scottish qualifying partnershipFee
For a copy in hard form of an original document by post£3
Copy or extract of document in hard copy in respect of the Scottish Partnerships PSC Regulations delivered by post (not same day delivery)£15
Copy or extract of document in hard copy in respect of the Scottish Partnerships PSC Regulations delivered by same day delivery£50
MicroficheFee
DVD copy of archive microfiche (up to 31 December 2002) by post£20
Shareholder listsFee
DVD containing bulk shareholders list by post£20
Archive searchFee
By post or telephone£20

16. Companies House register fees

You can search the Companies House register for free.

We charge a fee for the following products.

Companies House registerFee
For a missing image to be made available on the filing history of a company£3
Certified copiesFee
Certified copy of document (up to 10 pages) by post£15
Same day certified copy of document by post£50
Certificates of incorporationFee
By post£15
Same day certificate of Incorporation by post£50
Additional certificate (for same company) by post£10
Private fund limited partnerships only certificates of designationFee
By post£15
Same day certificate of designation by post£50
Additional certificate (for same company) by post£10
Private fund limited partnerships only combined certificate of registration and designationFee
By post£15
Same day certificate of designation by post£50
Additional certificate (for same company) by post£10

17. Extensible markup language (XML) gateway search fees

This subscription service allows third-party software to request and receive company information as data and image downloads.

Sign onFee
Monthly subscription (for each account)£4.70

You can check the availability of a company name and get basic company information for free. We charge a fee for the following products.

Full search fees apply, but 15% is taken off the total monthly invoice value.

Data chargesFee
Personal appointments£1
Document imagesFee
Download per document£1

18. Bulk product fees

Our bulk products offer third-parties company information as data and images for use in their own products, with initial database ‘snapshots’ and daily or weekly updates.

Access to information not on the public registerFee
Application by specified public authority (SPA) or credit reference agency (CRA)£54
Individual request by SPA or CRA (to access information)£5
DMS Posts, PAYE, Tax

Tax rates and thresholds 2024 to 2025

Debonair Management Services Limted

Tax rates and thresholds 2024 to 2025

These are a guide only and will be updated during the year as more information gets released from HMRC. Most have now been confirmed and a note has been added to any sections that have not been.

Updated 6th March 2024 – Employee Primary Threshold NI Rate changed from 10% to 8% and Married women’s reduced rate changed from 3.85% to 1.85%.

The following rates apply from 6th April 2024 until 5th April 2025 unless stated otherwise.

PAYE tax and Class 1 National Insurance Contributions

When you operate payroll through Shape, the software will work out the tax and national insurance contributions every time you pay your employees based on the below thresholds for 2024-2025 tax year.

Tax thresholds, rates and codes

The amount that is deducted from the employee is dependent on the employee’s tax code and how much they earn above their personal allowance.

England and Northern Ireland

The standard employee personal allowance for the 2024 to 2025 tax year is:

  • £242 per week
  • £1,048 per month
  • £12,570 per year
PAYE tax rateRate of taxAnnual earnings the rate applies to (above the PAYE threshold)
Basic tax rate20%Up to £37,700
Higher tax rate40%From £37,701 to £125,140
Additional tax rate45%Above £125,140

Scotland

Subject to parliamentary approval

The standard employee personal allowance for the 2024 to 2025 tax year is:

  • £242 per week
  • £1,048 per month
  • £12,570 per year
PAYE tax rateRate of taxAnnual earnings the rate applies to (above the PAYE threshold)
Starter tax rate19%Up to £2,306
Basic tax rate20%From £2,307 to £13,991
Intermediate tax rate21%From £13,992 to £31,092
Higher tax rate42%From £31,093 to £62,430
Advanced tax rate45%From £62,431 to £125,140
Top tax rate48%Above £125,141

Wales

Subject to parliamentary approval

The standard employee personal allowance for the 2024 to 2025 tax year is:

  • £242 per week
  • £1,048 per month
  • £12,570 per year
PAYE tax rateRate of taxAnnual earnings the rate applies to (above the PAYE threshold)
Basic tax rate20%Up to £37,700
Higher tax rate40%From £37,701 to £125,140
Additional tax rate45%Above £125,140

Emergency tax codes

The emergency tax codes from 6 April 2024 are:

  • 1257L W1
  • 1257L M1
  • 1257L X

More information on emergency tax codes.

Class 1 National Insurance Thresholds

National Insurance deductions are only made on earnings above the lower earnings limit.

Class 1 National Insurance thresholds2024 to 2025
Lower earnings limit£123 per week £533 per month £6,396 per year
Primary threshold£242 per week £1,048 per month £12,570 per year
Secondary threshold£175 per week £758 per month £9,100 per year
Freeport upper secondary threshold£481 per week £2,083 per month £25,000 per year
Upper secondary threshold (under 21)£967 per week £4,189 per month £50,270 per year
Apprentice upper secondary threshold (apprentice under 25)£967 per week £4,189 per month £50,270 per year
Veterans’ upper secondary threshold£967 per week £4,189 per month £50,270 per year
Upper earnings limit£967 per week £4,189 per month £50,270 per year

Class 1 National Insurance Rates

Employee (primary) contribution rates

National Insurance category letterEarnings at or above the lower earnings limit up to and including the primary thresholdEarnings above the primary threshold up to and including the upper earnings limitBalance of earnings above the upper earnings limit
A0%8%2%
B0%1.85%2%
Cnilnilnil
D (Investment Zone Deferment)0%2%2%
E (Investment Zone MWRRE)0%3.85%2%
F (Freeport)0%10%2%
H (apprentice under 25)0%10%2%
I (Freeport — married women and widows reduced rate)0%1.85%2%
J (Deferment)0%2%2%
K (Investment Zone over state pension age)nilnilnil
L (Freeport — deferment)0%2%2%
M (under 21)0%10%2%
N (Investment Zone Standard)0%10%2%
S (Freeport — over state pension age)nilnilnil
V (veteran)0%10%2%
Z (under 21 — deferment)0%2%2%

Employer (secondary) contribution rates

National Insurance category letterEarnings at or above the lower earnings limit up to and including the secondary thresholdEarnings above the secondary threshold up to and including the Freeport and Investment Zone upper secondary thresholdEarnings above Freeport and Investment Zone upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veteransBalance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans
A0%13.8%13.8%13.8%
B0%13.8%13.8%13.8%
C0%13.8%13.8%13.8%
D (Investment Zone Deferment)0%0%13.8%13.8%
E (Investment Zone MWRRE)0%0%13.8%13.8%
F (Freeport)0%0%13.8%13.8%
H (apprentice under 25)0%0%0%13.8%
I (Freeport — married women and widows reduced rate)0%0%13.8%13.8%
J (Deferment)0%13.8%13.8%13.8%
K (Investment Zone over state pension age)0%0%13.8%13.8%
L (Freeport — deferment)0%0%13.8%13.8%
M (under 21)0%0%0%13.8%
N (Investment Zone Standard)0%0%13.8%13.8%
S (Freeport — state pensioner)0%0%13.8%13.8%
V (veteran)0%0%0%13.8%
Z (under 21 — deferment)0%0%0%13.8%

Class 1A National Insurance: expenses and benefits

The National Insurance Class 1A rate on expenses and benefits for 2024 to 2025 is 13.8%.

More information about expenses and benefits.

Class 1A National Insurance: termination awards and sporting testimonial payments

The National Insurance Class 1A rate on termination awards and sporting testimonial payments for 2024 to 2025 is 13.8%. More information on termination awards.

More information on sporting testimonials.

Pay employers’ Class 1A National Insurance.

Class 1B National Insurance: PAYE Settlement Agreements (PSAs)

The National Insurance Class 1B rate for 2024 to 2025 is 13.8%. More information on PAYE Settlement Agreement.

Pay Class 1B National Insurance.

National Minimum Wage

HMRC guide to national minimum wage. There is also a National Minumum Wage calculator that can be used to check if employees are being paid the correct amount.

These rates apply from 1 April 2024.

The national living wage has been changed to include those 21 and over.

Category of workerHourly rate
Aged 21 and above (national living wage rate)£11.44
Aged 18 to 20 inclusive£8.60
Aged under 18 (but above compulsory school leaving age)£6.40
Apprentices aged under 19£6.40
Apprentices aged 19 and over but in the first year of their apprenticeship£6.40

Check previous years’ national minimum wage rates.

Statutory Maternity, Paternity, Adoption, Shared Parental and Parental Bereavement Pay

Use the maternity, adoption and paternity calculator for employers to work out your employee’s:

  • Statutory Maternity Pay (SMP)
  • paternity or adoption pay
  • qualifying week
  • average weekly earnings
  • leave period

These rates apply from 7 April 2024.

Type of payment or recovery2024 to 2025 rate
Statutory Maternity Pay — weekly rate for first 6 weeks90% of the employee’s average weekly earnings
Statutory Maternity Pay — weekly rate for remaining weeks£184.03 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Paternity Pay (SPP ) — weekly rate£184.03 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Adoption Pay (SAP ) — weekly rate for first 6 weeks90% of the employee’s average weekly earnings
Statutory Adoption Pay — weekly rate for remaining weeks£184.03 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Shared Parental Pay (ShPP ) — weekly rate£184.03 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Parental Bereavement Pay (SPBP ) — weekly rate£184.03 or 90% of the employee’s average weekly earnings, whichever is lower
SMP, SPP, ShPP, SAP or SPBP —proportion of your payments you can recover from HMRC92% if your total Class 1 National Insurance (both employee and employer contributions) is above £45,000 for the previous tax year 103% if your total Class 1 National Insurance for the previous tax year is £45,000 or lower

Statutory Sick Pay

The same weekly Statutory Sick Pay rate applies to all employees. However, the amount you must pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

Use the Statutory Sick Pay calculator to work out your employee’s sick pay, or read how to work out your employee’s Statutory Sick Pay manually using these rates.

Unrounded daily ratesNumber of qualifying days in a week1 day to pay2 days to pay3 days to pay4 days to pay5 days to pay6 days to pay7 days to pay
£16.67857£16.68£33.36£50.04£66.72£83.40£100.08£116.75
£19.45836£19.46£38.92£58.38£77.84£97.30£116.75—
£23.355£23.35£46.70£70.05£93.40£116.75——
£29.18754£29.19£58.38£87.57£116.75———
£38.91663£38.92£77.84£116.75————
£58.3752£58.38£1116.75—————
£116.751£116.75——————

Examples

Employee worksQualifying days in a weekPeriod of sicknessPIWNumber of waiting daysNumber of days SSP is payable forTotal due for that week
Monday to Friday55532£46.70
Tuesday, Thursday, Friday33000£0.00
Tuesday, Wednesday, Thursday, Friday44431£29.19

Student loan and postgraduate loan recovery

Rate or threshold2024 to 2025 rate
Employee earnings threshold for student loan plan 1£24,990 per year £1,922.30 per month £480.57 per week
Employee earnings threshold for student loan plan 2£27,295 per year £2,274.58 per month £524.90 per week
Employee earnings threshold for student loan plan 4£31,395 per year £2,606.25 per month £603.75 per week
Student loan deductions9%
Employee earnings threshold for postgraduate loan Not confirmed yet£21,000 per year £1,750 per month £403.84 per week
Postgraduate loan deductions6%

Company cars: advisory fuel rates

Use advisory fuel rates to work out mileage costs if you provide company cars to your employees. Not confirmed yet

These rates apply from 1 March 2023.

Engine sizePetrol — amount per mileLPG — amount per mile
1400cc or less13 pence10 pence
1401cc to 2000cc15 pence11 pence
Over 2000cc23 pence17 pence
Engine sizeDiesel — amount per mile
1600cc or less13 pence
1601cc to 2000cc15 pence
Over 2000cc20 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Check advisory fuel rates for previous periods.

Advisory electricity rate for fully electric cars from 1 March 2023

Amount per mile: 9 pence.

Electricity is not a fuel for car fuel benefit purposes.

Employee vehicles: mileage allowance payments

Not confirmed yet

Find out more about reporting and paying mileage allowance payments.

Type of vehicleRate per business mile 2023 to 2024
CarFor tax purposes: 45 pence for the first 10,000 business miles in a tax year, then 25 pence for each subsequent mile For National Insurance purposes: 45 pence for all business miles
Motorcycle24 pence for both tax and National Insurance purposes and for all business miles
Cycle20 pence for both tax and National Insurance purposes and for all business miles

Employment Allowance

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount.

Allowance2024 to 2025 rate
Employment Allowance£5,000

Apprenticeship Levy

Employers and connected companies with a total annual pay bill of more than £3 million are liable to the Apprenticeship Levy, which is payable monthly. Employers who are not connected to another company or charity will have an annual allowance that reduces the amount of Apprenticeship Levy you have to pay. Apprenticeship Levy is charged at a percentage of your annual pay bill.

Allowance or charge2024 to 2025 rate
Apprenticeship Levy allowance£15,000
Apprenticeship Levy charge0.5%
Budget, DMS Posts, PAYE, Tax

Autumn Statement 2023: what it means for small businesses

Debonair Management Services Limted

With a General Election looming next year, in his Autumn Statement the Chancellor made his bid for the business vote by announcing a raft of tax and spending changes that will affect UK small businesses – including major changes to National Insurance. 

Jeremy Hunt promised 110 different measures to “help grow the British economy” and I’ve pulled out the most important for small businesses. Here are the key takeaways: 

Major cuts to National Insurance

The Chancellor announced significant changes to National Insurance (NI), including to Class 2 and Class 4 NI, which could affect around two million self-employed people.

Compulsory Class 2 NI to be abolished

From April 2024, no one will be required to pay Class 2 self-employed NI contributions. Currently, self-employed people with profits above £12,570 pay a weekly flat rate of £3.45, but this will be scrapped from 6th April 2024. However, they will continue to receive access to contributory benefits, including the State Pension.

Those with profits between £6,725 and £12,570 will continue to get access to contributory benefits, including the State Pension, through a National Insurance credit, but they won’t actually have to pay any National Insurance.

Those with profits under £6,725 and others who pay Class 2 NI contributions voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so.

The main rate of Class 2 NI contributions had been due to rise to £3.70 per week in April 2024. But for those paying voluntarily, the current rate of £3.45 per week will be maintained for 2024-25.

Class 4 NI to be cut by 1%

The main rate of Class 4 self-employed NI contributions is to be cut from 9% to 8% from 6th April 2024. Self-employed people will pay Class 4 NI at the new rate of 8% on profits between £12,570 and £50,270 per year, and at 2% on profits over £50,270.

Class 1 employee’s NI main rate to be cut by 2%

Class 1 NI employee’s contributions are also to be cut. From 6th January 2024, these will be reduced from 12% to 10% on earnings between £12,571 and £50,271 (and will remain at 2% on anything above that). 

‘Full expensing’ to become permanent 

The Chancellor announced that the ‘full expensing’ policy – announced in this year’s Spring Budget – will now become permanent. Full capital expensing allows qualifying businesses to deduct investment in certain equipment from their profits to reduce the amount of Corporation Tax payable.

Companies that invest in other assets that don’t qualify for the full 100%, such as long-life assets, also benefit from a 50% first-year allowance and it was confirmed today that this will continue.

Business rates relief help

Business rates multiplier

For 2024-25, the small business multiplier in England will be frozen for a fourth consecutive year at 49.9p, while the standard multiplier will be increased in line with the September Consumer Prices Index (CPI) to 54.6p.

Retail, hospitality, and leisure relief 

The current 75% relief for eligible Retail, Hospitality and Leisure (RHL) properties is being extended for 2024-25. Around 230,000 RHL properties in England will be eligible to receive support up to a cash cap of £110,000 per business.

National Living Wage rise

The National Living Wage will increase to £11.44 from April 2024. That’s an increase of just over £1 from the current £10.42 per hour. The new rate will apply to workers aged 21 and over.

Help to tackle late payments 

In a bid to tackle the late payment problems encountered by many businesses, from April 2024 any firms bidding for government contracts worth more than £5m will have to demonstrate that they pay their purchase invoices within an average of 55 days, tightening to 45 days in April 2025, and to 30 days in the coming years.

Cash basis changes

The government is to introduce changes to cash basis accounting following a consultation launched earlier this year. Cash basis accounting is a simplified method which allows certain businesses to record their income and costs at the date the money comes in or is paid out, rather than the date displayed on an invoice they issue or bill they receive. A business including income and costs on the invoice and bill dates is referred to as using the accruals basis of accounting. 

From 6th April 2024, the changes introduced by the government will mean:

  • cash basis is set as the default, with an opt-out for accruals (which is the reverse of the current position where accruals is the default) 
  • the turnover threshold for businesses to use the cash basis will be removed
  • the £500 limit on interest deductions in the cash basis will be removed
  • restrictions on using relief for losses made in the cash basis will be removed

For more information, you can read the government’s consultation outcomes here.

Simplifying Making Tax Digital

The Autumn Statement also references the outcome of the government’s review into the impact of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) on small businesses, which was published today. 

This includes measures that simplify the requirements for quarterly updates, and remove the need to provide an End of Period Statement. The changes will take effect when MTD for ITSA is introduced in April 2026.

To learn more about all the changes announced in the Autumn Statement, you can read the full report on the government’s website.

DMS Posts, Tax

Making Tax Digital delay: everything you need to know

Debonair Management Services Limted

In this short guide, we’ll explain what the Making Tax Digital (MTD) delay means for businesses, accountants, and bookkeepers, and why you should still prepare for the legislation now.

What is the Making Tax Digital delay?

In December 2022, HMRC announced a delay in Making Tax Digital for Income Tax. Instead of launching in April 2024, the first phase of MTD for ITSA will begin in April 2026, for sole traders and landlords earning above £50,000. You can read the full statement to parliament here.

What is the new start date for MTD for ITSA?

Based on HMRC’s latest announcement, MTD for ITSA will follow a phased approach from April 2026.

Sole traders and landlords earning above £50,000 will need to comply with ITSA rules from April 2026.

Sole traders and landlords earning above £30,000 will follow in April 2027.

Our Making Tax Digital timeline includes information on all other MTD start dates.

Why was MTD delayed?

According to HMRC, MTD for ITSA was delayed to ease the pressure on businesses given the current economic climate. It was also stated that the delay would give businesses more time to adapt to new ways of working.

What changes have been made to MTD for ITSA?

HMRC will now introduce MTD for Income Tax with a phased approach, with multiple income thresholds.

From April 2026, sole traders and landlords earning above £50,000 annually will need to follow ITSA rules.

From April 2027, sole traders and landlords earning above £30,000 annually will follow.

General partnerships and smaller businesses earning less than £30,000 annually are yet to be mandated. We’ll be sure to report on this as soon as the dates are announced.

Has the MTD penalty system been delayed?

Taxpayers will be subject to the new Making Tax Digital penalty system once they’re mandated to join MTD.

For VAT-registered businesses already filing MTD for VAT returns, the new penalty system is already in place.

When sole traders and landlords earning above £50,000 are mandated for MTD for ITSA in April 2026, they will also be subject to the new penalty system.

Is Making Tax Digital going to happen?

Absolutely. Despite the slowdown in pace, digital transformation is still the direction of travel.

Making Tax Digital can help businesses run more efficiently, use resources more effectively, and save time on day-to-day admin. But right now, businesses are facing considerable challenges in light of economic uncertainty and will benefit from a little extra time to prepare.

Pushing the deadline back gives businesses and accounting practices more time to get confident about the legislation and learn how to use cloud-based accounting software to improve their overall business health.

Who is affected by the MTD for ITSA delay?

Self-employed individuals and landlords are impacted by the MTD for ITSA delay.

Sole traders and landlords earning above £50,000 annually will need to comply with ITSA rules from April 2026. Sole traders and landlords earning above £30,000 annually will follow in 2027.

General partnerships and those earning below £30,000 annually are yet to be mandated.

All this means is that the earliest ITSA rules will be mandated is April 2026 – so businesses, accountants, and bookkeepers have plenty of time to learn the new system and find ITSA-compatible software.

It’s also worth bearing in mind that, whilst thresholds have been established, you can voluntarily sign up to MTD for ITSA at any point once a public sign up process has been established and you’re using MTD for ITSA approved software.

Should you still prepare for MTD for ITSA now?

Definitely. Businesses, accountants, and bookkeepers should see the delay as an opportunity to find the right tools and hone their digital skills ahead of the deadline. Instead of pressing pause on your MTD preparations, use this time to learn how you can reap the most rewards from cloud-based software.

Don’t miss out on the benefits of digitalisation

Embracing digitalisation isn’t just about MTD compliance – tools and software can help you run a healthier business by demystifying your financial position with forecasts, reports, and live feeds.

Accountants and bookkeepers will also be able to provide real-time advice and guidance based on live data in their clients’ software. So both accounting practices and businesses benefit from having clear and accurate data, thanks to cloud-based software.

What’s more, some cloud-based accounting software packages allow you to integrate multiple tools and platforms. So you can join the dots between all kinds of business functions – such as project management, payroll, and financial planning. This means less hopping between tabs and more time spent focusing on your business.

DMS Posts, Tax

Government announces phased mandation of Making Tax Digital for ITSA

Debonair Management Services Limted

Understanding that self-employed individuals and landlords are currently facing a challenging economic environment, and the transition to Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) represents a significant change to taxpayers and HMRC for how self-employment and property income is reported, the government is giving a longer period to prepare for MTD. The mandatory use of software is therefore being phased in from April 2026, rather than April 2024.

From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most customers will be able to join voluntarily beforehand meaning they can eliminate common errors and save time managing their tax affairs.

The government has also announced a review into the needs of smaller businesses, and particularly those under the £30,000 income threshold. The review will consider how MTD for ITSA can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations. It will also inform the approach for any further roll out of MTD for ITSA after April 2027.

Mandation of MTD for ITSA will not be extended to general partnerships in 2025 as previously announced. The government remains committed to introducing MTD for ITSA to partnerships in line with its vision set out in the government’s tax administration strategy.

Victoria Atkins, Financial Secretary to the Treasury, said:

It is right to take the time to work together to maximise the benefits of Making Tax Digital for small businesses by implementing the change gradually. It is important to ensure this works for everyone: taxpayers, tax agents, software developers, as well as HMRC.

Smaller businesses in particular should be able to experience the benefits of increased digitalisation of Income Tax in a way which meets their needs. That is why we are also today announcing a review to establish the best way to achieve this.

Jim Harra, Chief Executive and First Permanent Secretary, HM Revenue and Customs, said:

HMRC remains committed to the delivery of Making Tax Digital as a critical part of our strategy for digitalising and modernising the tax system, but we want to make sure we get this right and deliver it effectively.

A phased approach to mandating MTD for Income Tax will allow us to work together with our partners to make sure that our self-employed and landlord customers can make the most of the opportunities this will bring.

The announcement relates to MTD for ITSA only. Making Tax Digital for VAT has already been implemented and is demonstrating the benefits to businesses and the tax system of digital ways of working.

Further information

A copy of the Written Ministerial Statement made by Victoria Atkins, Financial Secretary to the Treasury, on 19 December 2022 is available on UK Parliament: Written questions, answers and statements.

Under MTD for ITSA, businesses, self-employed individuals and landlords will keep digital records, and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. In response they will receive an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they can add any non-business information and finalise their tax affairs using MTD-compatible software. This will replace the need for a Self Assessment tax return.

GOV.UK guidance on Making Tax Digital for Income Tax will be updated shortly.

Before today’s announcement, MTD for ITSA was mandated from April 2024 for customers with a total gross income over £10,000 from self-employment and property in a tax year, with partnerships mandated from 2025.