What is Making Tax Digital for ITSA?
Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) moves self-employed people and landlords away from a single annual return towards digital record-keeping with quarterly updates to HMRC.
Instead of one annual Self Assessment return, affected taxpayers submit a quarterly summary of income and expenses via approved software, followed by a final end-of-year declaration.
Key point: MTD for ITSA does not change how much tax you pay or when you pay it. It changes how and how often you report your income to HMRC.
Who is affected and when?
- From 6 April 2026: Sole traders and landlords with combined gross income over £50,000
- From April 2027: Those with combined gross income over £30,000
- From April 2028: Expected to extend to income over £20,000
Income means gross (before expenses) turnover from self-employment plus gross rental income. If you have both, they're combined. The threshold applies to the previous tax year's income.
How quarterly reporting works
Each quarter you submit a summary of income and expenses to HMRC. The four periods are:
- 6 April – 5 July (due by 5 August)
- 6 July – 5 October (due by 5 November)
- 6 October – 5 January (due by 5 February)
- 6 January – 5 April (due by 5 May)
After the fourth quarter, you submit a final declaration to confirm the figures, claim any additional reliefs, and finalise your tax bill — similar to your old Self Assessment return.
Approved MTD software
You must use HMRC-approved software. Popular options include QuickBooks, Xero, FreeAgent (free with some NatWest/RBS business accounts), Sage, and GoSimpleTax.
Spreadsheet users: You can continue using spreadsheets but will need bridging software to connect them to HMRC's MTD API. Several low-cost bridging tools exist for this purpose.
MTD penalties
HMRC's points-based system applies. Each missed or late quarterly submission earns a penalty point. Reaching 4 points triggers a £200 penalty. Points expire after 24 months of compliance. Non-compliance with digital record-keeping can attract additional penalties.
What to do now
- Check whether your income exceeded the threshold in 2024/25
- Choose and register with HMRC-approved MTD software
- Register for MTD for ITSA via your HMRC online account
- Begin keeping digital records from the start of your first MTD period
If you use an accountant, they can register on your behalf as your agent and submit quarterly updates for you — which most people find simpler than managing it themselves.
Need help getting set up for MTD?
Our consultants handle the registration, software selection, and ongoing quarterly submissions. Free initial callback.
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