Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is a major change in the way self-employed individuals and landlords in the UK manage and report their taxes.
It’s part of the government’s initiative to modernise the tax system, making it more efficient and less error-prone.
If you’re self-employed, this change will likely affect how you record your income and submit your tax returns.
What Is MTD ITSA?
MTD ITSA stands for Making Tax Digital for Income Tax Self Assessment. It’s an extension of the government’s Making Tax Digital (MTD) initiative, which already applies to VAT.
MTD ITSA focuses on streamlining the process of reporting income tax for:
•Self-employed individuals.
•Landlords with annual rental income.
Under MTD ITSA, you’ll need to:
Keep digital records of your income and expenses
Submit quarterly updates to HMRC through MTD-compatible software (e.g. Quickbooks, Xero, Freeagent) - no payments will be due at this point.
File an End of Period Statement (EOPS) and a Final Declaration to confirm your annual income and tax obligations. This will be due on the usual deadline of 31st January.
Who Does MTD ITSA Apply To?
MTD ITSA will apply to:
Self-employed individuals and landlords with an annual business or property income exceeding £50,000 starting from April 2026.
Those with income between £30,000 and £50,000 starting from April 2027.
HMRC is still consulting on how MTD ITSA will apply to individuals earning below £30,000 annually, but it’s important to stay informed about future changes.
How Will MTD ITSA Affect You?
Digital Record-Keeping
If you’re used to keeping paper records or spreadsheets, you’ll need to switch to MTD-compatible software to maintain your records digitally.
Quarterly Reporting
Instead of filing a single Self Assessment tax return once a year, you’ll submit four quarterly updates to HMRC. These updates provide a snapshot of your income and expenses throughout the year.
End of Year Submissions
You’ll still need to finalise your accounts at the end of the year, but the process will be streamlined through digital tools.
Increased Transparency
With regular updates, you’ll have a clearer picture of your tax obligations throughout the year, reducing the risk of surprises at year-end.
What next?
Under the guidelines, you do not need to start keeping digital records until April 2026 or April 2027 (see above for the guidance on timelines), however it's a good idea to get yourself set up and confident with accounting software if you haven't already.
Reach out to find out more about how we can help you get set up and about which accountancy software might be the best fit for you.
Email us on claire@wearethreesixnine.co.uk or visit our contact page
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