Making Tax Digital for ITSA: What’s Coming, Who’s Affected & Why You Should Act Now

The world of tax is changing (again). Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is the next step in HMRC’s digital journey, and it’s going to affect millions of people. The good news is that with the right preparation, it doesn’t need to be painful.

Let’s run through what’s happening, who it applies to, and how you can get ready in good time.

What is MTD for ITSA?

From April 2026, HMRC will require many individuals to keep digital records and submit quarterly updates through approved software, rather than filing one big tax return at the end of the year.

Those that have self employed income and/or rental income (INCOME NOT PROFIT ) will be required to keep their records using an approved accounting software.

Who Will Be Affected?

MTD for ITSA will apply if you are:

·        A sole trader with business income over £50,000 (from April 2026).

·        A landlord with property (includes furnished holiday lets and foreign property income) with income over £50,000 (from April 2026).

·        A sole trader and landlord with a combined income over £50,000 (from April 2026).

·        From April 2027, the threshold will reduce to £30,000.

·        From April 2028, the threshold will reduce to £20,000.

If you have multiple income sources (for example, rental income and sole trader income), you’ll need to maintain separate digital records and submissions for each one.

What if my rental income is jointly owned?

If you own a rental property jointly (for example with a spouse, family member or business partner), each individual owner is responsible for reporting their share of the income under MTD for ITSA.

• You’ll each need to keep digital records of your share.

·        You’ll each need to file separate quarterly updates and final submissions through MTD-compatible software.

·        HMRC will not allow one joint return – everyone has to report their own slice.

What are the quarterly filing deadlines?

Under MTD ITSA, you’ll need to submit quarterly updates to HMRC. The periods are fixed – they don’t change to match your business year. The deadlines are:

• Quarter 1: 6 April – 5 July → due 5 August

• Quarter 2: 6 July – 5 October → due 5 November

• Quarter 3: 6 October – 5 January → due 5 February

• Quarter 4: 6 January – 5 April → due 5 May

Does this replace the end of year Self Assessment tax return?

Not quite. The big difference is that instead of one annual tax return, you’ll send HMRC multiple digital submissions throughout the year:

·        Quarterly updates (Q1–Q4)

·        Final Declaration (your complete tax position, including any other income such as savings or dividends) filed by 31^st January as normal

So, while the annual Self Assessment form as we know it will disappear, there is still a final annual submission to bring everything together.

Software Options

You’ll need MTD-compatible software to comply. My recommendations are:

·        Xero – robust, user-friendly, and well suited for small businesses.

·        FreeAgent – another excellent option, and sometimes free if your bank provides it.

·        Hammock  - software for landlords

Why Start Early?

I strongly recommend getting set up with software now if you are due to fall into the April 2026 bracket or start a year before your deadline. Doing this gives you time to:

·        Get familiar with how the software works.

·        Smooth out any issues before quarterly reporting becomes compulsory.

·        Benefit from cleaner, more up-to-date financial data.

Think of it as a practice run – by the time 2026/ 2027 or 2028 arrives, it’ll feel routine rather than daunting.

The Benefits of MTD for You

·        Better organisation – no more lost receipts or last-minute scrambles.

·        Real-time insight – see how your income and tax are shaping up throughout the year.

·        Fewer errors – software helps keep things accurate.

·        Stronger financial planning – quarterly data can help with budgeting and cash flow.

A Quick MTD Joke (Because Even Taxes Need a Smile)

Why did the landlord and sole trader break up? Because they couldn’t file their differences digitally until 2026.

Here to Support You

This change is significant, but you don’t need to go through it alone. I’ll be here to guide you, advise on the best software for your situation, and make sure you’re set up well before the deadlines arrive.

Hawkins Accounting can provide the following service:

·        Software subscriptions

·        Software training

·        Bookkeeping

·        Filing quarterly returns

·        Complete the Final Declaration

If you’d like to prepare now and avoid the rush later, get in touch — I’m here to help every step of the way.

Lucy Hawkins

Hawkins Accounting

07719 328 343

lucy@hawkinsaccounting.co.uk

www.hawkinsaccounting.co.uk