Making Tax Digital for Income Tax (ITSA)
The definitive guide to navigating HMRC's new digital tax rules. Find out if you're affected, when the changes happen, and how to transition your self-assessment seamlessly.
Quarterly Updates
Say goodbye to annual returns
Digital Records
Streamline your accounting
What is MTD for ITSA?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC’s initiative to modernise the tax system. It requires self-employed individuals and landlords to keep digital records and use MTD-compatible software to send income and expense updates to HMRC every quarter, rather than filing a single Annual Tax Return.
Who Needs to Comply with MTD?
MTD for ITSA applies based on your combined qualifying income from self-employment and property.
Self-Employed
Sole traders earning above the threshold will need to submit quarterly updates for their business income and expenses using approved software.
Landlords
Individuals receiving income from property (UK or overseas, including Furnished Holiday Lets) above the threshold must join MTD.
Partnerships
General partnerships will be mandated at a later date (to be confirmed by HMRC). More complex partnerships face even later mandates.
Rollout Timeline & Thresholds
HMRC is taking a phased approach to introducing MTD for ITSA.
April 2026
Mandatory for individuals with a qualifying income strictly over £50,000.
April 2027
Threshold lowers. Mandatory for individuals with a qualifying income strictly over £30,000.
TBC
Rollout to general partnerships and individuals with lower income levels, as well as complex business structures.
Traditional Self Assessment vs MTD
| Feature | Old Self Assessment | Making Tax Digital (MTD) |
|---|---|---|
| Record Keeping | Paper receipts, spreadsheets, or software at your discretion. | Digital records are mandatory. Software must link directly to HMRC. |
| Filing Frequency | Once a year (Annual Tax Return). | Quarterly updates + Final Declaration. |
| Deadlines | 31 January following the end of the tax year. | Updates due 5th of Aug, Nov, Feb, May. Final declaration due 31 January. |
| Payment Dates | 31 Jan and 31 Jul (Payments on Account). | Unchanged. Payments remain on 31 Jan and 31 Jul. |
| Correction Window | Up to 12 months after the 31 Jan deadline. | Quarterly updates can be amended in the next quarter or via the Final Declaration. |
Your 4-Step Preparation Guide
Don't wait until the last minute. Start transitioning your processes now.
Assess Your Income
Review your gross income from self-employment and property. If it exceeds £50,000, you have until April 2026. If between £30k and £50k, April 2027.
Choose MTD Software
HMRC no longer accepts free-typing into their portal. You must use recognized MTD-compatible bridging software or a complete accounting package.
Digitize Your Records
Start keeping digital records of every transaction. Using bank feeds and receipt scanning apps will drastically reduce your quarterly workload.
Sign Up via HMRC
Once you have software and digital records in place, you or your accountant must officially sign up for MTD for ITSA through your Government Gateway account.
Frequently Asked Questions
No. While you must submit income and expense updates quarterly, your tax payment deadlines remain the same: 31 January and 31 July (if payments on account apply).
Only your gross self-employment and property income count towards the £50k/£30k MTD thresholds. However, if you are mandated for MTD, you will still need to report your PAYE income and other details (like dividends) on your Final Declaration, similar to the old Annual Return.
Yes, but you cannot copy and paste data into HMRC's portal. You must use an MTD-compatible "bridging software" tool that digitally links your spreadsheet directly to HMRC's systems.
Yes. If it is not practical for you to use software due to age, disability, location (e.g., no internet access), or religious beliefs, you can apply for a "digital exclusion" exemption. Foster carers and non-domiciled individuals also have specific exemptions.
HMRC recently removed the EOPS requirement. Instead, taxpayers will finalize their tax position through a single Final Declaration process by 31 January, simplifying the year-end tasks.
Ready to transition to Making Tax Digital?
Speak to your accountant or check HMRC's official guidance to ensure you're on the right track.
Read Official HMRC Guidance