Making Tax Digital for Self-Assessment (MTD for ITSA) - applicable from April 2026
Introduction
Making Tax Digital (MTD) was launched in 2019. The first iteration was Making Tax Digital for VAT which became mandatory from 1st April 2022.
The next step will be Making Tax Digital for Income Tax and Self-Assessment (MTD for ITSA).
Who will MTD for ITSA apply to?
From 6th April 2026, MTD for ITSA applies to self-employed sole traders, non-incorporated partnerships and landlords with total income of £50,000 or more per year.
For example, an individual who is a landlord and sole trader may receive £20,000 in rent and £30,000 in gross revenue for the year. Although the two values are individually below £50,000, together they take total income to more than £50,000.
From 6th April 2027, MTD for ITSA will apply to self-employed sole traders, non-incorporated partnerships and landlords with total income of £30,000 or more per year.
Who does MTD for ITSA not apply to?
MTD for ITSA will not apply to individuals whose income is from PAYE employment, limited company dividends, investments, savings and pensions only.
For example, if a limited company director receives a PAYE salary plus dividends only, they would not qualify for MTD for ITSA.
However, if they also received rental income and their total income was over £50,000, they would then qualify for MTD for ITSA.
How does MTD for ITSA differ from existing personal self-assessment tax returns?
Currently, individuals in receipt of non-PAYE income are required to submit an annual self-assessment tax return. The self-assessment tax year runs from 6th April to 5th April the following year.
The tax return (online) submission and tax payment deadline is 31st January. A payment on account may be due on 31st July depending on ongoing tax liabilities.
Under MTD for ITSA it is proposed that the current self-assessment tax return will be replaced by five new reporting obligations made during and after the tax year. There will be quarterly updates required followed by an "end of period statement" (EOPS).
The five MTD for ITSA submissions will be required on the following dates;
- Quarter 1 - 6th April to 5th July - Deadline of 5th August
- Quarter 2 - 6th July to 5th October - Deadline of 5th November
- Quarter 3 - 6th October to 5th January - Deadline of 5th February
- Quarter 4 - 6th January to 5th April - Deadline of 5th May
- End of Period Statement (EOPS) - 6th April to 5th April - Deadline of 31st January
Payment of tax will still be due by 31st January with payments on account required by 31st July dependent on ongoing tax liabilities.
What do I need to do to prepare for MTD for ITSA?
As part of the requirements for MTD for ITSA, digital record keeping by businesses and individuals will be required.
It is therefore advised that those individuals required to comply with MTD to ITSA use online accountancy software that enables digital records to be kept. Examples of MTD approved software include Xero and FreeAgent.
Quarterly MTD for ITSA submissions must be made digitally using MTD approved software.
If MTD for ITSA applies to you then HMRC will write to you prior to 6th April 2026 advising registration.
Accountancy Software Subscriptions
Xero subscriptions billed via Matrix Accountancy Services are eligible for an ongoing 20% discount.
FreeAgent subscriptions are available free of charge for Mettle and NatWest business banking customers.
Limited Company Incorporation
You may consider incorporating a business or property portfolio with a turnover in excess of £30,000 per year.
Limited Companies are not eligible for MTD for ITSA and typically file once per year.
Further Information
If you think MTD for ITSA may apply, you can contact me at will@matrixaccountancyservices.com or by calling 01788 486065.
You can also book a call with me here - Calendly.