Making Tax Digital for Income Tax (MTD ITSA) is a change to how sole traders and landlords report their income to HMRC.

Instead of filing one Self-Assessment return each year, you will be required to keep digital records and submit quarterly updates during the year. This is followed by a final declaration after the year end.

The aim is to move tax reporting from an annual event to an ongoing process.

MTD ITSA will be introduced in stages, depending on your income level:

• From April 2026 if your self-employment and property income is over £50,000
• From April 2027 if your income is over £30,000
• From April 2028 if your income is over £20,000

These thresholds are based on gross income before expenses are deducted.

Income from both property and self-employment is combined when determining whether you fall within the rules.

You can also see the key dates and rollout stages in our Making Tax Digital timeline.

Under MTD ITSA you will need to:

• Keep digital records of income and expenses
• Submit four quarterly updates each year
• Submit a final declaration after the end of the tax year

Most clients will continue to rely on their accountant to manage the reporting process and ensure submissions are accurate.

If you’d like a clearer overview of how the reporting works, you can read our short guide explaining Making Tax Digital for Income Tax.

The annual Self-Assessment return is effectively replaced by the final declaration under MTD.

This final step confirms the full tax postion for the year once all quarterly updates have been submitted.

You will need digital records of the income and expenses relating to your business or property.

In practice this means keeping:

• income received
• business or property expenses
• relevant transaction dates
• supporting documentation such as receipts

Exactly how these records are maintained depends on the service level you choose with us.

Our MTD overview guide explains more about what HMRC expects, while our MTD preparation checklist helps you make sure you’re prepared.

Not necessarily.

Some clients prefer to keep their own records and simply have us review and submit their updates.

Others prefer us to take responsibility for maintaining the records and preparing the submissions.

Our service levels are designed around how involved you want to be rather than assuming every client wants to manage accounting software themselves.

MTD introduces more reporting points during the year, so the structure changes.

However, when records are kept consistently, the process tends to feel more manageable than trying to reconstruct everything at year-end.

The level of involvement also depends on the service level you choose – that varies from clients who maintain their own records to those who prefer us to handle the process end-to-end.

MTD relies on clean, up-to-date data.

If information arrives incomplete or requires significant correction, additional work may be needed before the submission can be made.

While HMRC has indicated that the early stages of MTD will focus on helping people adjust to the new system, late submissions may lead to penalties.

Where record quality becomes a recurring issue, we may recommend moving to a different level of support so that the process can be managed more reliably.

Our role is to make sure the reporting process works smoothly and remains compliant for our clients.

Depending on the level of support required, we can help with:

• setting up the digital record-keeping process
• reviewing records before quarterly submissions
• submitting updates to HMRC
• completing the final declaration
• reviewing your tax postion before the year ends.

The aim is to remove uncertainty and keep the process predictable. Just get in touch if want to talk this through further.

If you are likely to fall withing the first phase of MTD ITSA, the next step is simply to review the available service levels and decide how involved you would like to be in the process.

If you’re unsure which option is appropriate, we’re happy to talk it through.

If you’re unsure when you may be brought into scope, our Making Tax Digital rollout timeline shows how the rules are being introduced. You may also find our Making Tax Digital preparation checklist helpful.

Yes. If a property is jointly owned, each individual owner must report their own share of the income under Making Tax Digital.

This means each owner may have their own quarterly reporting obligations, depending on their overall income level.

No. Making Tax Digital for Income Tax only applies to individuals who report income through Self-Assessment, such as sole traders and landlords.

Companies, including limited and unlimited companies, report their income through Corporation Tax, so they are not affected by the MTD for Income Tax rules.

However, many companies are already required to follow Making Tax Digital for VAT if they are VAT registered.

Not yet. Partnerships are not currently included in the MTD for Income Tax rollout.

However, HMRC has indicated that partnerships are likely to be brought into the system at a later stage.

HMRC combines income from both sources when determining whether you fall into the MTD thresholds.

For example, if you earn £30,000 from property and £25,000 from self-employment, your total income would place you within the first phase of MTD.

Some individuals may be exempt if it is not reasonably practicable for them to use digital tools.

Examples include certain age-related, disability or accessibility circumstances.

In these cases, an exemption must be requested from HMRC, and we can help you with this if it applies to you.

Spreadsheets can still be used, but they must connect to MTD-compatible software that submits the data to HMRC.

Quarterly updates are cumulative, which means errors can normally be corrected in later submissions during the year.

The final declaration at the end of the tax year confirms the correct figures for the year.

If you think you’ve made a mistake, let us know as soon as possible (and before you forget 😉).

No. At present, tax payment deadlines remain the same as under Self-Assessment.

Payments on account are still typically due on 31 January and 31 July, with any balancing payment due the following January.