Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC’s move to bring Self Assessment into a regular digital reporting routine. Instead of relying only on a traditional annual tax return, affected taxpayers must keep digital records, send quarterly updates and complete a final declaration after the tax year.
Every Penny Accounts helps sole traders, landlords and self-employed individuals prepare for MTD for Income Tax. We explain what the rules mean, review your current record-keeping, discuss the right software, and help turn tax administration into a manageable routine.
From April 2026, MTD for Income Tax applies to people with qualifying income over £50,000. From April 2027, the threshold drops to £30,000. A further £20,000 phase is expected from April 2028.
The rules apply to gross income from self-employment and property income, not employment wages taxed through PAYE. HMRC looks at your total income from these sources, so combined income from trading and rental properties can bring you into scope even if each source is lower on its own.
You should check your position if you are:
Digital tax rules do not mean every self-employed person must join at once. People below the qualifying income thresholds can usually continue with the existing Self Assessment return process for now, although planning ahead can make the change easier when the threshold drops.
Making Tax Digital for Income Tax changes both how records are kept and how income tax information is sent to HMRC. You must maintain digital records of income and expenses in compatible software. Paper records and spreadsheets can still support your admin in some situations, yet the required figures must be recorded digitally and submitted through MTD-compatible software.
Quarterly updates are summaries of income and expenses for each period. They are not the same as a full assessment tax return, and they do not settle the final income tax position. The usual update dates are August 7th, November 7th, February 7th, and May 7th. Submitting quarterly updates provides HMRC with regular information and helps you keep a closer track of cash flow.
At the end of the tax year, you complete the final declaration. This brings together trading profit, property income, other income and relevant adjustments. The final declaration is due by 31 January after the tax year, in line with Self Assessment deadlines. HMRC may also use a points-based penalty system for late quarterly submissions or missed obligations.
Moving to making tax digital MTD is a significant change if your books are still built around bank statements, receipts and year-end catch-up work. Our support starts with your current records, bank accounts and software, then we agree on the practical work needed to keep your income and expenses up to date.
We can help with:
Many self-employed individuals and landlords struggle to adapt to digital tax reporting. Moving from traditional bookkeeping to real-time digital record-keeping can feel daunting. At Every Penny Accounts, we offer personalised support to make the transition smooth and stress-free.
One of the biggest hurdles is learning how to use MTD-compatible software. If you’re unfamiliar with digital accounting tools, the change can be overwhelming. That’s why we provide step-by-step training, helping you navigate the software, record transactions accurately, and submit tax updates confidently. We also offer ongoing support, so you never feel lost in the process.
For those managing multiple income streams, keeping track of trading and property income separately can be challenging. Our bookkeeping services ensure all earnings are recorded correctly, preventing confusion during quarterly submissions and the Final Declaration.
Another common issue is staying on top of submission deadlines. Missing a deadline can lead to penalties, especially for VAT-registered businesses managing multiple compliance obligations. We remove this burden by sending reminders and handling submissions on your behalf, keeping you fully compliant.
Finally, understanding income tax rules around allowances, deductions, and adjustments can be complex. Our tax specialists at Every Penny Accounts ensure that your EOPS and Final Declaration are completed correctly, helping you maximise tax efficiency while staying compliant with HMRC regulations.
As MTD for ITSA continues to expand, staying compliant requires keeping up with evolving legislation. With changing income tax rules, new reporting obligations, and software updates, sole traders and landlords need reliable support to navigate these developments.
At Every Penny Accounts, we provide regular updates on MTD changes, ensuring you are always aware of upcoming thresholds and submission deadlines. We also conduct annual compliance reviews to confirm that your digital records meet HMRC’s latest standards, preventing compliance issues before they arise. As new legislation is introduced, our experts offer tailored guidance, helping you adapt to changes smoothly and keep your tax affairs in order.
Making Tax Digital for ITSA is changing how self-employed individuals and landlords manage tax reporting. Compliance is essential to avoid penalties and maintain accurate financial records. At Every Penny Accounts, we offer expert MTD services to ensure a seamless transition, making sure your tax obligations are met without hassle.
If you need assistance with MTD compliance, digital record-keeping, or tax filing, contact Every Penny Accounts today. Our team is ready to help you simplify digital tax reporting and ensure you remain fully compliant. Additionally, check out our blog now for everything you need to know about MTD for ITSA.
Making Tax Digital for Income Tax will be compulsory for self-employed individuals and landlords who meet the qualifying income thresholds. The first phase applies from April 2026 to those with a qualifying income over £50,000, with the £30,000 threshold following from April 2027. A further £20,000 phase is expected from April 2028.
MTD for Income Tax changes the reporting routine. Instead of preparing only a traditional annual tax return, affected taxpayers need to keep digital records, send quarterly updates through compatible software and complete a final declaration after the tax year. The final declaration brings together the year’s income, adjustments, and other relevant information.
You need a clear record-keeping routine, MTD-compatible software, and a way to keep income and expenses updated throughout the year. It also helps to review your current bank accounts, invoicing process, receipt storage and property records before your start date. Every Penny Accounts can help you decide what needs to change and set up a practical process.
No. The rollout is based on qualifying income from self-employment and property income. People below the relevant thresholds can usually continue using the existing Self Assessment return process for now. HMRC is phasing in the rules, so sole traders and landlords near the future threshold should still plan ahead.
Yes. HMRC looks at gross income from relevant sources, including rental income and self-employment income. A landlord with multiple properties, or someone with both trading income and property income, may reach the threshold through combined income even if each source seems modest on its own.
Some people may be exempt if using digital tools is not reasonably practicable for them, for example, due to digital exclusion. Exemptions are not automatic. You need to apply to HMRC and wait for a decision. Certain groups, such as trustees, may also sit outside the standard MTD for Income Tax rollout.
