What is MTD ITSA? (Making Tax Digital Income Tax Self Assessment)
MTD ITSA is part of HMRC’s broader Making Tax Digital (MTD) initiative, designed to make tax administration more efficient and accessible. Starting April 2026, self-employed individuals and landlords who earn over £50,000 annually must keep digital records and submit quarterly updates to HMRC using MTD-compliant software.
Further roll-out dates include:
- April 2027: Mandatory for those earning £30,000 to £50,000
- April 2028: Mandatory for those earning £20,000 to £30,000
Who does April 2026 changes affect?
- If your Self-employed income/turnover exceeds £50,000 per annum
- If you are a landlord earning rental income over £50,000 per year
- Anyone with qualifying income if the total income you get in a tax year from self-employment plus property exceeds £50,000 per annum.
Key Changes Under MTD ITSA
- Digital Record-Keeping – You must use MTD-compatible software to maintain your financial records. (Xero, QuickBooks, FreeAgent)
- Quarterly Submissions – Instead of an annual tax return, you will submit updates every three months, providing HMRC with a clearer picture of your tax liability. The standard deadlines for submitting quarterly updates are as follows:
- End-of-Period Statement (EOPS) & Final Declaration – At the end of each tax year, you’ll submit an EOPS and a final declaration, replacing the traditional Self-Assessment tax return.
STEPS TO TAKE BEFORE APRIL 2026
- Choose your Software: Select an MTD-compliant software like QuickBooks, Xero, or FreeAgent. Check with us first to see what may be best for you. (Ask your accountant if they can get discounted prices). Note: HMRC does not provide software for MTD ITSA reporting — you must use approved third-party software.
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Get Organised: Start recording your transactions digitally. Open and use a separate business bank account to keep things clear.
- Understand Key Deadlines: Get familiar with quarterly submission dates to avoid penalties
Although MTD ITSA won’t become mandatory until April 2026, I recommend starting the transition as soon as possible. Getting set up early will allow us to establish a routine and ensure you’re fully prepared when HMRC requires compliance.
