Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) is set to change the way self-employed individuals and landlords report their earnings. From April 2026, individuals earning over £50,000 from self-employment or property income will need to comply with MTD. Those earning over £30,000 will follow from April 2027.
This new system aims to simplify tax reporting, reduce errors, and ensure businesses and landlords stay on top of their finances throughout the year. However, the transition requires preparation. Here’s what you need to know and how to prepare.
What is Making Tax Digital for ITSA?
Alongside the traditional Self-Assessment tax return, those who are required to submit under MTD for Income Tax will also have to file . Businesses and landlords will need to:
- Keep digital records of income and expenses using MTD-compatible software
- Submit quarterly updates to HMRC detailing their earnings
- File an end-of-year declaration to confirm final tax calculations
Who does MTD for ITSA apply to?
The new rules apply to:
- Self-employed individuals with an annual income over £50,000 (from April 2026) or £30,000 (from April 2027)
- Landlords earning over the same thresholds from rental income
How to prepare for MTD for ITSA
- You will have to use commercial software that works with Making Tax Digital for Income Tax
Paper records and spreadsheets won’t be accepted under MTD. You’ll need to use HMRC-approved software which are listed here
These platforms will allow you to track income and expenses, submit reports automatically, and ensure compliance.
- Understand your quarterly reporting obligations
Instead of one annual return, you’ll submit four quarterly updates throughout the year, followed by a final end-of-year submission. This means:
- Reports will be due every three months
- Keeping records updated regularly will make submissions easier
- Working with an accountant can help you stay on top of deadlines
- Start keeping digital records now
Rather than waiting until the deadline, start recording your income and expenses digitally now. This will help you get used to the system and avoid a last-minute rush.
- Review your business structure
If you have multiple income sources, such as property and self-employment, it’s important to understand how MTD will apply to each. This is a good time to review whether your current business structure is still the most tax-efficient option.
- Seek professional advice
Transitioning to MTD for ITSA will be a big change, but you don’t have to do it alone. We can help you choose the right software, manage your tax obligations, and ensure compliance.
Final thoughts
Making Tax Digital is designed to make tax reporting easier and more efficient but getting ready in advance is crucial. By adopting digital record-keeping now, understanding your reporting obligations, and seeking professional advice, you can ensure a smooth transition.
If you’d like support with MTD for ITSA, PM+M’s MTD specialists are here to help. Get in touch by emailing enquiries@pmm.co.uk to ensure you’re fully prepared.
