Making Tax Digital for Income Tax (MTD for ITSA)
What does MTD for ITSA (Making Tax Digital for Income Tax Self Assessment) mean for my business?
At T-A Accounts, we are preparing for the upcoming HMRC initiative called Making Tax Digital for Income Tax Self Assessment (or MTD for ITSA for short). This new mandatory system will change how individuals report income to HMRC.
The MTD for ITSA regime will become mandatory from 6 April 2026 for certain individuals, depending on your self-employment and/or property rental income:
| Annual Income | Mandatory MTD for ITSA Start |
|---|---|
| £50,000+ | 2026–2027 |
| £30,000+ | 2027–2028 |
| £20,000+ | 2028–2029 |
What changes will you need to make?
Based on the thresholds shown above, you will be legally required to use compatible software to:
Digital records of income and expenses
Keep and retain transaction-level (income and expenses) digital records for each self-employment and/or property business.
Submit quarterly reports to HMRC
Submit quarterly update reports to HMRC for each self-employment and/or property business.
Finalise end-of-year and make adjustments
Finalise your end-of-year position by providing details of other personal income sources, making adjustments, claiming reliefs, and submitting your digital tax return.
Don’t worry though, as when instructing T-A Accounts to act as your agent, we will handle these submissions for you and support you as we move away from annual to quarterly reporting.
Starting with the 2026–2027 tax year, this new process will replace the traditional self-assessment tax return for individuals earning over £50,000. Your first quarterly update will be due by 7 August 2026.
If your income falls into the £30,000+ or £20,000+ brackets, we will work with you closer to the relevant start dates to ensure full compliance.
We understand that not everyone will find this transition easy and not everyone will welcome it, but it is something we all have to adhere to. So rest assured that we will do our very best to make it all as easy as possible for everyone.
There will be no changes to your income tax payment dates.
There’s no need to stress,
even if this is all new to you.
If you have been exclusively paper-based and are dreading these changes, do get in touch as we have various options for you.
Why is HMRC introducing this?
HMRC’s aim is to improve record keeping and tax accuracy, thereby reducing tax loss to the exchequer. These changes apply to everyone meeting the criteria, regardless of the quality of existing records.
While it may seem daunting, it could be a great opportunity to streamline your accounting processes. Many clients find cloud-based record keeping provides real-time insights that assist with better strategic planning.
Failure to comply with the new rules will result in financial penalties.
Don’t panic – here’s what’s changing (and how we can help)
This quick HMRC video outlines your new obligations under Making Tax Digital – but there’s no need to worry.
At T-A Accounts, we’ll guide you through the changes, provide the right software, let you know what we need from you and when, and handle all the digital submissions on your behalf.
What is ‘compatible’ software?
HMRC will not provide software. However, the system you already use might meet the new requirements.
We recommend QuickBooks and include it within our Sole Trader Plus and Partnership Plus packages. QuickBooks allows you to track sales, send invoices, and capture receipts, and offers training sessions to help you get started.
What are the next steps?
Our practice is very busy implementing our new processes for MTD for ITSA, supporting our clients.
New enquiries can be made via our contact page and one of our team will get back to you to arrange a phone call so we can get to know you and your business better before working with you.
You can read more about HMRC’s MTD for ITSA initiative here.
