Making Tax Digital for Income Tax is here. Are you prepared?
Making Tax Digital for Income Tax (MTD ITSA) has been a long time coming, and from 6 April 2026, it is now in force and here to stay.
This will change how many sole traders and landlords report their income to HMRC. While there has been a lot of noise around this, in practice, it is more of a shift in process than something to be concerned about.
Who does this apply to?
As of 6 April 2026, MTD ITSA will apply if your total income from self-employment and/or property exceeds £50,000.
This threshold will then reduce to:
£30,000 from April 2027
£20,000 from April 2028
What’s changing?
Instead of submitting one tax return each year, you will need to:
Keep digital records of your income and expenses. HMRC’s intention is to move away from paper records and standalone spreadsheets, with software-based record keeping becoming the norm.
Submit updates to HMRC every quarter
Submit a final declaration after the end of the tax year
N.B.
The traditional annual tax return, as you know it, is being replaced by quarterly updates throughout the year, followed by a final declaration.
What this means in practice
The main change is the move to quarterly reporting.
If you currently:
keep records manually, or
only review your figures once a year
this will need to become more regular. However, with the right setup, this is largely handled through software and does not need to be time-consuming.
Do you need to worry?
In short, no.
For most clients, this will simply mean moving onto software (if they are not on it already) and either submitting quarterly returns yourself, or allowing us to handle the submissions in the background.
We have prepared for these changes and are working with clients to ensure everything is in place well ahead of the deadlines.
Next steps
We have already been preparing clients who fall within the £50,000 threshold. For those who will be brought in under the lower thresholds, it is sensible to start thinking about this now.
If you would like to understand how and when this will likely applies to you, or get set up early, please feel free to get in touch.
