The Autumn Budget 2026, published 28 October 2026, includes critical administrative changes for Making Tax Digital for Income Tax Self Assessment (MTD ITSA). The mandatory digital record-keeping and quarterly reporting start date remains April 2026 for those with income over £50,000, but a “soft landing” penalty regime is extended for the first two years, waiving late submission penalties for taxpayers who make genuine efforts to comply. The controversial Close Company Reporting (CCS) requirement, which would have mandated quarterly reporting for close companies, is abandoned. Additionally, timely payment for Self Assessment via PAYE coding becomes optional rather than mandatory, giving taxpayers more flexibility. These measures respond to lobbying from professional bodies including Chartered Accountants Ireland.
Key Takeaways
- MTD ITSA Penalty Soft Landing Extended: The penalty-free period for late quarterly updates and final declarations is extended to cover the first two tax years of mandatory participation (2026/27 and 2027/28). This applies to both late submissions and late payments, provided the taxpayer has made reasonable attempts to comply. HMRC will focus on education and support rather than enforcement during this transition.
- Close Company Quarterly Reporting Abandoned: The proposed requirement for close companies to submit quarterly updates under MTD ITSA is withdrawn. This removes a significant compliance burden for family-owned and small private companies, aligning their reporting obligations with the standard MTD ITSA timeline for individuals and partnerships.
- Optional PAYE Coding for Self Assessment Payments: The measure to automatically collect Self Assessment liabilities through PAYE tax codes for employees with taxable income above £30,000 is made optional. Taxpayers can now choose to pay via PAYE coding or traditional payment methods, reducing administrative complexity for employers and payroll departments.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement