What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is a major HMRC initiative requiring self-employed individuals and landlords to keep digital records and submit quarterly updates to HMRC. It is the biggest change to the UK tax system in decades.
Who is Affected and When?
MTD for ITSA is being rolled out in phases:
- April 2026 — Self-employed individuals and landlords with total income over £50,000
- April 2027 — Those with total income over £30,000
- April 2028 (planned) — Those with total income over £20,000
Total income includes both self-employment income and rental income combined. Partnerships will be included at a later date.
What Changes Under MTD for ITSA?
Digital Record Keeping
You will be required to keep digital records of all business income and expenses using HMRC-compatible software. Paper records alone will no longer meet HMRC's requirements.
Quarterly Submissions
Instead of one annual tax return, you will submit a summary of your income and expenses to HMRC four times per year:
- Quarter 1: 6 April – 5 July (due 7 August)
- Quarter 2: 6 July – 5 October (due 7 November)
- Quarter 3: 6 October – 5 January (due 7 February)
- Quarter 4: 6 January – 5 April (due 7 May)
End of Period Statement (EOPS)
After the tax year ends, you will submit an End of Period Statement confirming your final figures and claiming any reliefs or adjustments.
Final Declaration
The Final Declaration (replacing the traditional Self Assessment return) must be submitted by 31 January following the end of the tax year.
What Software Do I Need?
You must use HMRC-recognised MTD-compatible software. Popular options include:
- QuickBooks
- Xero
- FreeAgent
- Sage
Free or low-cost options are also available. We can advise on the best software for your circumstances.
Exemptions
You may be exempt from MTD for ITSA if:
- Your income is below the threshold
- You are digitally excluded (e.g., disability, religious beliefs, location)
- You are a trustee, executor, or personal representative
What Should You Do Now?
- Check if you are affected — Review your total self-employment and rental income
- Choose your software — Start using MTD-compatible software as soon as possible
- Speak to your accountant — Ascot Accountancy can guide you through the transition
- Don't wait — The earlier you prepare, the smoother the transition will be
How Ascot Accountancy Can Help
We are helping all of our clients prepare for MTD for ITSA well ahead of the April 2026 deadline. We can set up your software, manage your quarterly submissions, and ensure you remain compliant. Contact us today to get started.