Tax for the self-employed and Landlords is changing drastically, Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is predicted to affect over a million taxpayers. So it's important to find out if/when you will be one of them, what HMRC will require you to do and how we are here to guide you through it seamlessly.
Understanding MTD for ITSA
MTD for ITSA is a pivotal component of the government's initiative to modernise the tax system. Its primary goal is to streamline tax reporting by mandating digital record-keeping and the submission of quarterly updates to HMRC, which will be shown in more depth below.
MTD-compatible software will be mandatory for anyone affected by MTD for ITSA. However, if you provide your earnings information to your accountant, they can digitalise and submit it for you, removing the need for you to use separate bookkeeping/filing software.
Key Dates and Thresholds
The rollout of MTD for ITSA will occur in phases:
From 06 April 2026: Individuals with an annual qualifying income exceeding £50,000 from self-employment or property will be required to comply.
From 06 April 2027: The threshold lowers to include those earning over £30,000 annually.
It's important to note that the threshold is based on your combined gross turnover of your self-employment and property income. If your income falls below these thresholds, you are not currently mandated to adopt MTD for ITSA but can choose to do so voluntarily.
Reporting and Deadlines
If the thresholds above apply to you, then you will be required to file at least 4 quarterly updates and a final declaration every year:
4 quarterly updates of income and expenses are required for each separate self-employment and if you're a landlord renting out a property.
You will have to file 4 separate quarterly updates for each trade, for example, if you are a taxi driver, personal trainer and a landlord, you will need to file 12 quarterly updates every year (4 each)
The quarterly updates are a cumulative total of income and expenses accumulated in the tax year to date. Meaning if you earned £20,000 in quarter 1, and then £10,000 in quarter 2, the quarter 2 submission would show a total of £30,000 earnings so far in the tax year.
A final declaration replaces the traditional Self-Assessment tax return, it includes all taxable income as well as more in-depth self-employed accounts, taking into account depreciation and losses brought forward etc.
Submission Type | Deadline |
Quarter 1 Update (06 Apr - 05 Jul) | 07 August |
Quarter 2 Update (06 Jul - 05 Oct) | 07 November |
Quarter 3 Update (06 Oct - 05 Jan) | 07 February |
Quarter 4 Update (06 Jan - 05 Apr) | 07 May |
Final Declaration | 31 January (Following Year) |
The filing requirements above will be enforced after the 2026 tax year ends on 05 April 2026. 2026 will still require a standard tax return to be filed by 31 January 2027.
Penalty Changes
HMRC are switching to a penalty points system for late filing and is changing the rates on late payment penalties. HMRC will still also apply interest on late payments based on the Bank of England base rate. There are many specifics regarding MTD for ITSA penalties, so we have created a separate post for those who want to learn more. Please click here.
How Short and Sons Will Be Helping You Our priority is to ensure that your transition to MTD for ITSA is as effortless as possible. Here's how we support you:
Quarterly Filing Reminders: We provide timely reminders to keep you on track with your submissions.
Secure Online Portal: Our platform allows for the safe uploading of documents and e-signing, ensuring your data remains protected.
Simplified Earnings: We accept your earnings information in various ways that work for you and even provide easy online templates for common trades. Removing HMRC's requirement for you to use MTD-compliant software yourself!
Staying Responsive: We aim to continue being readily available as this is a massive change for us and many of our clients, and we understand that there will be many questions along the way.
Proactive Accountancy: To maintain our high standards and compliance with HMRC, we will actively keep on top of any changes made to MTD for ITSA and continue using class-leading software to manage the coming transformation.
Short & Sons Accountants have already helped many people through the Basis Period Reform and aim to do the same with MTD for ITSA. We are proud of what our clients say about us and are eager to impress again. If you think Short and Sons Accountants are the right choice to guide you through MTD for ITSA, please get in touch.