Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)
Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)
What is MTD ITSA?
MTD ITSA is a new mandatory digital tax reporting system for the self-employed and landlords in the UK. It requires digital record-keeping and quarterly submissions to HMRC using compatible software.
When Is It Being Introduced?
The rollout begins in April 2026, with phased implementation based on taxpayer income:
Who Is Affected?
- Self-employed individuals
- UK and foreign property landlords
- Must have qualifying income (business + rental) over the thresholds above.
Excluded: Partnerships (for now), income from employment, pensions, savings, or dividends.
What Must Be Done?
- Submit quarterly updates via HMRC-approved software.
- Each update shows year-to-date income/expenses.
- Separate returns needed for each business and rental type.
Quarterly periods & deadlines:
Do I Still File a Tax Return?
Yes. Even with quarterly updates, you must still file a year-end Self Assessment tax return by 31 January (online) or 31 October (paper).
You’ll also file a final annual adjustment to align your digital submissions with your official return.
Exemptions Apply To:
- Those with Power of Attorney
- Certain non-resident entertainers/sportspeople
- Some groups like ministers of religion, Lloyd’s Underwriters
- Small unincorporated non-profits
Note: HMRC will apply strict criteria for exemptions.
What Records Are Required?
- Transaction-level digital records (income and expenses)
- Must be maintained in compatible software (e.g. Xero, Sage, QuickBooks)
- Some concessions for low turnover or joint lets
What Is Submitted?
- Quarterly: Summary of income & expenses (not individual transactions)
- Final: Annual adjustment and tax return
- Other income (employment, dividends, etc.) is not included in MTD ITSA
Are Payment Dates Changing?
No. Tax payment deadlines remain:
- 31 January for balance due
- 31 January / 31 July for payments on account
Penalties for Non-Compliance
- 1 point per missed deadline
- £200 fine after 4 points
- Points expire after 24 months unless threshold reached
Can You Opt Out?
Yes, after 3 years of digital compliance if your qualifying income falls below £20,000 annually.
What’s Next for MTD?
- Under £20,000 income: Likely phased in from 2029+
- Partnerships: Expected by 2030+
- MTD for Corporation Tax: Cancelled
What Is England & Company Doing?
- Preparing clients for transition over next 4 years
- Partnering with software providers
- Hosting client seminars in early 2026
- Offering training and submission support
