Making Tax Digital for Income Tax (ITSA)

Following our exploration of MTD for VAT in the previous chapter, where digital submissions are already standard, we now turn to Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). If you're self-employed or a landlord, this upcoming change will reshape how you handle income tax, demanding proactive preparation.

Deadlines for MTD and ITSA

MTD for ITSA rolls out in phases:

  • From April 2026: Mandatory for sole traders and landlords with business income over £50,000.

  • From April 2027: Extends to those with income over £30,000.

Quarterly updates replace annual returns, with end-of-year finalisation. For corporation tax timelines, see Making Tax Digital for Corporation Tax. Monitor updates at gov.uk.

STAT: Estimated 4.2 million individuals will be affected by MTD for ITSA by 2027.

Eligibility for MTD for ITSA

Eligibility targets self-employed individuals, partnerships, and landlords filing Self Assessment with qualifying income from business or property. Thresholds start at £50,000, dropping to £30,000. Excludes trusts and estates initially. Check your status via HMRC's tool at gov.uk.

For niche cases, refer to Specific Scenarios in MTD.

MTD-Compliant Software for ITSA

Use MTD-compliant software for digital records and quarterly submissions. It must connect via API to HMRC, support error-free filing, and handle basis period reform. Options like Xero or QuickBooks are suitable; bridging for spreadsheets allowed. Dive deeper into choices in Compliant Software for MTD.

Exemptions from MTD for ITSA

MTD for ITSA exemptions apply if compliance is unreasonable due to age, disability, remote location, or religious grounds. Digitally excluded individuals can apply; low-income below thresholds are automatically out. Voluntary for under £30,000 until further notice.

Apply through HMRC; more on challenges in Challenges and Considerations in MTD.

MTD for Self-Employed

For self-employed under MTD for ITSA, maintain digital records of income/expenses, submit quarterly summaries from 2026/2027. Benefits include real-time tax insights. Tailored for sole traders; partnerships follow similar rules. See audience-specific advice in Specific Audiences for MTD.

MTD for Landlords

Landlords with property income must digitise records and report quarterly under MTD for ITSA. Covers UK and overseas properties; joint owners prorate income. Software simplifies tracking rents and deductions. For joint properties, check Specific Scenarios in MTD.

Making Tax Do-able with PJL Accounts

PJL Accounts specialises in MTD for ITSA readiness, assisting self-employed and landlords with seamless setups. Our clients say: "PJL turned a daunting process into a straightforward one." Rely on our expertise for compliance confidence.

Guided Preparation Steps

✅ Step 1: Check if You’re Registered

  • New VAT registrations are auto-enrolled into MTD.

  • If you registered before April 2022 and haven’t switched, you need to act now.

✅ Step 2: Register for MTD for VAT (if needed)

  • Use your Government Gateway login

  • Sign up here: Sign Up with HMRC

  • Register at least 7 days before your next VAT Return is due

  • Wait for HMRC confirmation (usually within 72 hours)

✅ Step 3: Using an Agent?

  • We can register and manage MTD for you

  • You stay hands-off—we do the admin and handle compliance

If challenges arise, reach out to us for tailored assistance.

Remember we are here to enhance your work life balance. We have three ways to get you ready for ‘Making Tax Digital’.

Frequently Asked

  • Sole traders and landlords with income over £50,000; confirm via HMRC.

  • Any HMRC-approved with API links; see Compliant Software for MTD.

  • Yes, if digitally excluded; apply to HMRC.

  • Partners report individually; details in Specific Audiences for MTD.

  • Penalties apply; avoid via early prep – more in Challenges and Considerations in MTD.

Your Path to MTD for ITSA Success

Adopting MTD for ITSA early ensures accurate tax handling and business focus. Procrastination risks fines and complexity. Reach out to PJL Accounts for personalised support today.