MTD for ITSA — your questions answered

What is MTD for ITSA? MTD for ITSA stands for Making Tax Digital for Income Tax Self Assessment. We know — not the catchiest name. But what it actually means is pretty simple: instead of filing one tax return at the end of the year, you'll send HMRC a quick update on your income and expenses four times a year, then wrap everything up with a short final declaration at the end.

It's HMRC's way of bringing tax into the modern age. And with the right software, it's honestly less painful than it sounds.

Does this affect me? If you're self-employed, a sole trader, or a landlord — yes, it's coming for you. The change is rolling out in stages based on your yearly income:

• April 2026 — if your income is over £50,000
• April 2027 — if your income is over £30,000
• April 2028 — if your income is over £20,000

⚠️ These dates have shifted before — worth double-checking at HMRC.gov.uk to make sure you're working from the latest schedule.

How do I work out my income for this? HMRC looks at your gross income from self-employment and property combined — that's your total before expenses come off. So if you earn £40,000 freelancing and £15,000 from renting out a property, that's £55,000 qualifying income.

⚠️ If you've got more complex income — like income from a partnership — check HMRC's current guidance on how that's treated.

What do I actually have to do differently? Right now, you file one Self Assessment return a year. Under MTD for ITSA, you'll send four shorter updates throughout the year instead — one per quarter — then a final declaration to close everything off.

The quarterly updates aren't a full tax return. Think of them more like keeping HMRC in the loop as you go. You're just summarising what came in and what went out.

So I don't have to do a Self Assessment return anymore? For the income that falls under MTD for ITSA, the quarterly updates and final declaration take its place. But if you've got other types of income outside MTD's scope, you might still need a Self Assessment return for those parts.

⚠️ Check with HMRC or your accountant if you have multiple income streams to make sure you know exactly what applies to you.

Do I need special software? Yes — HMRC requires you to use compatible software to send your updates. A plain spreadsheet won't do it on its own. But if you're already working in Excel or a similar format, bridging software (like Tax Optimiser) can connect what you've already got to HMRC's systems. No need to start from scratch.

What happens if I miss a deadline? HMRC is bringing in a points-based penalty system. Miss a deadline, get a point. Rack up enough points, and a financial penalty kicks in. It works a bit like driving licence points — they add up.

⚠️ The details of how the penalty system works in practice are worth verifying with HMRC, as they're subject to change.

When do I need to start getting ready? If your income is over £50,000, April 2026 isn't that far away. The best thing you can do right now is make sure you're keeping digital records of your income and expenses — and find software you actually feel comfortable using before the deadline creeps up.

Getting set up early means the quarterly updates will feel like a quick admin task rather than a mad scramble four times a year.

Is anyone exempt? Some people won't need to follow MTD for ITSA — for example, those with very low income, or people who can show that digital record-keeping genuinely isn't a practical option for them.

⚠️ The exemptions list has changed during the MTD rollout, so always check the current HMRC guidance to see if any apply to you.