Making Tax Digital for Income Tax, also known as MTD for ITSA (Income Tax Self-Assessment), is the next major phase in HMRC’s Making Tax Digital programme. It’s set to transform how self-employed individuals and landlords keep records and report income tax.
Under MTD for ITSA, millions of sole traders and property landlords will need to keep digital records and submit income updates quarterly, instead of filing a single annual Self-Assessment tax return.
This guide explains:
Whether you’re a sole trader or a landlord, understanding MTD for ITSA early will help you avoid surprises and get your systems ready in good time.
Making Tax Digital for Income Tax (MTD for ITSA) is HMRC’s plan to replace the traditional annual Self-Assessment tax return with a more modern, digital-first system.
Under MTD for Income Tax, instead of submitting just one annual tax return, self-employed individuals and landlords will need to:
The goal is to give HMRC a more up-to-date view of your income and tax position, while helping you stay organised and avoid big surprises when it’s time to pay your tax bill.
Tip: You’ll need approved MTD for ITSA software to keep records and send updates spreadsheets alone won’t meet the new requirements.
For the latest guidance, check GOV.UK: Making Tax Digital for Income Tax.
The rollout of Making Tax Digital for Income Tax (MTD for ITSA) will happen in phases starting with self-employed individuals and landlords with higher annual incomes.
| Start Date | Who It Applies To |
| April 2026 | Self-employed individuals and landlords with total annual income over £50,000 |
| April 2027 | Individuals with total annual income over £30,000 |
Important: The income threshold is based on your gross income from self-employment and/or property not your taxable profit. For example, if you have rental income and freelance earnings that add up to more than £50,000, you’ll need to follow MTD for ITSA from April 2026.
If your total business and property income stays below £30,000, or if you only have employment income taxed through PAYE, MTD for ITSA doesn’t apply to you for now but future extensions are likely, so it’s wise to keep an eye on HMRC’s updates.
For the latest rollout plans, see GOV.UK: Making Tax Digital.
Under Making Tax Digital for Income Tax (MTD for ITSA), you must keep certain records digitally and submit them using MTD-compatible software.
To stay compliant, you’ll need to keep digital records of:
Key point: Manual spreadsheets alone won’t meet MTD for ITSA rules unless they’re connected to bridging software that links your records to HMRC’s systems via an approved digital link.
Using fully MTD-compatible accounting software makes this process simpler ensuring your records are secure, accurate, and ready for quarterly updates.
For details on approved software, see HMRC’s list of MTD-compatible software.
Making Tax Digital for Income Tax (MTD for ITSA) changes how and when you report your income to HMRC. Instead of filing a single annual Self-Assessment return, you’ll have three key reporting requirements each year:
Quarterly Updates
You must submit an income and expenses summary every three months using your MTD-compatible software. These updates give HMRC a real-time snapshot of your earnings and allowable expenses helping you budget for tax bills ahead of time.
End of Period Statement (EOPS)
At the end of your accounting period (usually the end of your tax year), you’ll submit an End of Period Statement (EOPS). This finalises your income for the year and allows you to claim any reliefs or adjustments you’re entitled to.
Final Declaration (Crystallisation)
Finally, you’ll complete a Final Declaration, sometimes called crystallisation. This step replaces the traditional Self-Assessment tax return — confirming all your income sources, allowances, and the tax you owe for the year.
Key point: All three stages must be done digitally through approved software manual paper returns won’t be accepted under MTD for ITSA.
For more details, see GOV.UK: MTD for Income Tax Self-Assessment.
To comply with Making Tax Digital for Income Tax (MTD for ITSA), you’ll need approved software that can handle every step of the new digital process.
Your MTD for ITSA software must be able to:
Tip: If you currently rely on spreadsheets, you’ll need bridging software or an add-on to meet MTD rules but switching to fully integrated software is usually easier in the long run.
See our MTD Compliant Software Guide for side-by-side comparisons and tips on picking the best fit for your business.
If your annual income falls within the MTD for Income Tax thresholds and you fail to comply when it becomes mandatory, you could face penalties and extra hassle.
Possible consequences include:
Key point: Even if MTD for ITSA doesn’t apply to you until 2026 or 2027, preparing now gives you time to:
Tip: Don’t wait until the deadlines hit being ready early makes life easier and keeps you fully compliant.
Yes there are limited exemptions from MTD for Income Tax (MTD for ITSA). You may be able to opt out if you can prove it’s not reasonably practical for you to comply due to:
To get an exemption, you’ll need to apply directly to HMRC and provide evidence to support your request.
For more details on who qualifies and how to apply, see our MTD Exemptions and Deferrals guide.
At Accounting Wise, we’re already helping sole traders and landlords prepare for MTD for income tax. Our services include:
The rollout of MTD for ITSA is one of the biggest changes to income tax in decades. Don’t leave it until the last minute the earlier you get started, the smoother the transition will be.
Talk to our team to get MTD-ready and take the stress out of income tax reporting.
Need help with your Self-Assessment? Contact Accounting Wise Today!
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Making Tax Digital for Income Tax (MTD for ITSA) is a UK government initiative that requires self-employed individuals and landlords with income over £50,000 to keep digital records and submit quarterly updates to HMRC using MTD-compatible software.
Who needs to follow MTD for Income Tax?
From April 2026, self-employed individuals and landlords with a total income over £50,000 must comply. Those earning between £30,000 and £50,000 will be included from April 2027. Partnerships and those earning below £30,000 are not yet included.
When does MTD for Income Tax start?
MTD for Income Tax starts on 6 April 2026 for individuals with income over £50,000. It becomes mandatory for those earning £30,000+ from 6 April 2027.
What do I need to do to comply with MTD for Income Tax?
You’ll need to:
Can I still use spreadsheets for MTD?
Yes, but only if your spreadsheet links to bridging software that allows you to submit data to HMRC digitally. Fully digital software is generally easier and more compliant.
Does MTD replace Self Assessment?
Not entirely. MTD changes how you report your income, but you’ll still need to make a final declaration each year. It replaces the annual Self Assessment tax return with a digital, ongoing reporting process.
How can Accounting Wise help me prepare for MTD?
We can help you:
1 Choose Your Package
Select the accounting services that best suit your needs. Choose from our ready-made packages or build your own to see exactly how much you’ll be paying each month.
2 Sign up with Us
Once you’ve chosen your service level, just send over a few details using our quick sign-up form or give us a call to get started.
3 You’re ready to go
That’s it! We’ll get your accounting services set up, contact your previous accountant if needed, and begin the authorisation process with HMRC.
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