Did you know that the UK has one of the largest tax gaps in the world due to avoidable errors? That’s exactly what Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) aims to fix.
If you’re self-employed or a landlord, the way you report your income to HMRC is about to undergo its biggest shake-up in 30 years. Gone are the days of the annual "shoebox of receipts" panic. MTD for ITSA is replacing the traditional annual tax return with a modern, digital system designed to make tax administration easier, more accurate, and closer to real-time.
Here is everything you need to know to stay compliant and ahead of the curve.
What is MTD for ITSA?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is a government initiative that requires businesses and landlords to keep digital records and submit tax updates to HMRC using compatible software.
Instead of filing one big Self Assessment tax return once a year, you will:
- Keep digital records of your income and expenses.
- Send quarterly updates to HMRC.
- Finalise your business income with an End of Period Statement (EOPS).
- Submit a Final Declaration to tie everything together.
When does MTD for ITSA start?
| Date | Who is Affected | Qualifying Income |
| April 2026 | Self-employed individuals and landlords | Over £50,000 |
| April 2027 | Self-employed individuals and landlords | Between £30,000 and £50,000 |
| April 2028 | Planned extension to self-employed individuals and landlords (to be confirmed) | Over £20,000 |
Note: If your income is below £30,000, you are not currently mandated to join, but you can opt-in voluntarily to get ahead of the digital curve.
Who is exempt?
You may not need to sign up if:
- You are a trustee, executor, or administrator.
- You are digitally excluded (unable to use computers due to age, disability, or religious reasons).
- You do not have a National Insurance number.
How Quarterly Updates Work
Under the new system, you must send a summary of your business income and expenses to HMRC every three months. This helps you estimate your tax liability in real-time, preventing nasty surprises at the end of the year.
The deadlines for these quarterly returns are standard across the board:
| Quarter Period | Submission Deadline |
| 6 April – 5 July | 7 August |
| 6 July – 5 October | 7 November |
| 6 October – 5 January | 7 February |
| 6 January – 5 April | 7 May |
Pro Tip: You can elect to use calendar quarters (e.g., 1 April – 30 June) if that aligns better with your business accounting.
How to Prepare Now
Even though the deadline feels far away, transitioning to digital record-keeping takes time.
- Check your qualifying income: Review your turnover from self-employment and property.
- Get compatible software: Move away from paper records. Start using accounting software or a spreadsheet that bridges to HMRC’s API.
- Separate your finances: If you haven't already, separate your business banking from personal banking to make digital tracking easier.
- Speak to your accountant: If you are unsure about your eligibility or how to handle the transition, get professional advice early.
Frequently Asked Questions
Has MTD been delayed?
Yes. Originally slated for earlier release, the mandatory start date for those earning over £50,000 is now April 2026.
Are partnerships affected?
General partnerships will eventually be required to join MTD for ITSA, but the start date has been delayed. We are currently waiting for HMRC to confirm the specific timeline for partnerships.
What happens if I miss a deadline?
MTD operates on a points-based penalty system. Late submissions incur points; once you reach a certain threshold, you will be fined. HMRC applies statutory late-payment penalties where tax remains unpaid after the due date. Penalties are charged in stages, based on how long the tax remains outstanding.
| Time Late | Penalty Applied |
| 1 Month Late | 5% of unpaid tax is charged |
| 6 Months Late | 5% of tax still unpaid is levied as a penalty |
| 12 Months Late | 5% of tax still unpaid is applied as a penalty |
Will I still need to file a Self Assessment tax return?
Not in the traditional sense. MTD replaces the main SA tax return for your business income. However, you will still need to submit a Final Declaration to confirm your total income and claim any personal reliefs.
Transform Your Tax Process with Ease
If you're looking for an online accountant in the UK to help you navigate Making Tax Digital (MTD), it's important to find one that is both reliable and affordable. Switching to a new digital system can be complex, but the right accountant makes the process clear and straightforward.
As experienced online accountants, we help you transition to MTD smoothly by:
- Digitising your accounts: We ensure all your financial records are compliant with HMRC's digital requirements.
- Providing step-by-step guidance: We explain exactly what you need to do and when, so you're never left guessing.
- Keeping you organised: We help you stay on top of deadlines and avoid penalties, all at a competitive price.
Looking for a cheap or affordable online accountant in the UK who specialises in digital tax? Contact us to see how we can simplify your MTD compliance.
