If you’re self-employed, you might have heard whispers about MTD for ITSA coming your way next year (April 2026). But what does it all mean and what will you have to do differently?
Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is an initiative from HMRC aimed at modernising tax handling in the UK. Starting in 2026, if you’re self-employed and have a turnover of above £50,000 annually, you’ll need to get ready for some changes in how you manage and report your income and expenses.
Why the change?
HMRC’s goal with MTD for ITSA is to make tax administration more efficient and reduce errors. Moving to digital records and quarterly reporting should streamline the process, helping everyone stay on top of their tax throughout the year, rather than scrambling at the last minute.
What you need to do
First, check if MTD for ITSA applies to you. If you receive income over £50,000 it’s likely – whether you run a business as a sole trader or a property landlord or both. Here’s what you’ll need to do from April 2026:
Digital records: You’ll need to keep your business records digitally, using compatible software. This includes income, expenses, and any other relevant financial information.
Quarterly updates: You’ll need to submit quarterly updates to HMRC using your digital records. This helps you and HMRC keep track of your tax obligations throughout the year. The deadlines for submissions will be:
- 7th August
- 7th November
- 7th February
- 7th May
Final declaration: At the end of the tax year, you’ll still need to submit a final declaration and tax return, confirming your annual income and expenses.
Choosing the right software
To comply with MTD for ITSA, you’ll need software that’s compatible with HMRC’s requirements. Look for software that not only records your financial data but also integrates smoothly with HMRC’s systems.
Preparing for the transition
Change can be daunting, but with a bit of preparation, you’ll breeze through MTD for ITSA:
- Start using digital record-keeping software early to familiarize yourself with its features.
- Keep your financial records up to date throughout the year to make quarterly reporting a breeze.
- Stay informed – HMRC will provide updates and support to help you navigate the transition.
Benefits of MTD for ITSA
HMRC is hopeful that the self-employed will see the upsides of this change, which include:
Reduced errors: Digital records and regular updates can minimize mistakes, potentially reducing the risk of fines and penalties.
Better cash flow management: Quarterly reporting gives you a clearer picture of your tax obligations, helping you plan and manage your finances more effectively.
HMRC support: HMRC is committed to supporting taxpayers through the transition, offering guidance and resources to ensure compliance.
Staying on top of tax obligations is crucial. MTD for ITSA is designed to simplify the process and improve accuracy. Embrace the change, adopt digital solutions early, and reach out for support if you need it.
It’s important to note, too, if you’re under the £50,000 income threshold currently, that from April 2027 MTD for ITSA will apply to those earning £30,000 or more and from April 2028 it will apply to earnings of £20,000 or more.
Need some advice?
We can help you make sure you understand the requirements and explain your different options for accounting software. Or, as Peterborough small business accountants, let us manage the whole process for you! Get in touch on at 07842 507362 or send us an email: contact@thobaniaccountants.co.uk
