The full description of this system is Making Tax Digital for Income Tax Self Assessment. (MTD for ITSA)
MTD was first announced in the 2015 Budget and following consultation, the first phase was implemented in 2019 for VAT registered businesses. A few further delays followed due to the Covid Pandemic, but the MTD system is here to stay, with the first phase of MTD for ITSA taking place in April 2026.
What you need to know about MTD for ITSA.
MTD for ITSA requires businesses and landlords with qualifying income to keep digital records of this and submit them to HMRC on a quarterly basis using compatible digital software.
Who will be affected
- From April 2026 – Businesses, self-employed individuals and landlords with a qualifying income over £50,000.
- From April 2027 – Businesses, self-employed individuals and landlords with a qualifying income over £30,000.
What you need to do
If you are a Business, individual who is self-employed or a landlord, you will be required to:
- Operate MTD from 6 April 2026 in relation to your trading and property income chargeable to Income Tax and Class 4 National Insurance contributions, if your total qualifying income from these income sources for a tax year exceeds £50,000.
- Operate MTD from 6 April 2027 in relation to your trading and property income chargeable to Income Tax and Class 4 National Insurance contributions, if your total qualifying income from these income sources for a tax year exceeds £30,000.
What does this mean for you?
Instead of filing a single annual tax return you will need to:
- Maintain digital records of income and expenses
- Submit quarterly updates to HMRC
- Complete an end of year statement and final declaration
Our advice would be to allow plenty of time to prepare for changes, this reduces stress and can avoid the risk of potential non-compliance and filing penalties.
If you are unsure if you qualify for MTD for ITSA or need advice on compatible software and submissions, please contact our team who will be happy to help.
