Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) is coming—and it will change how many sole traders and landlords keep records and report to HMRC. Instead of one Self-Assessment tax return each year, you’ll send updates digitally throughout the year using approved software. 1
Who will be affected, and when?
MTD for Income Tax is being rolled out in phases based on your gross income (before expenses) from self‑employment and property combined: 12
- From 6 April 2026: if your turnover is above £50,000
- From 6 April 2027: if your turnover is above £30,000
- From 6 April 2028: if your turnover is above £20,000 (planned next phase) 31
HMRC will look at your latest tax return to decide whether you’re over the threshold and tell you when you need to join. 1
What will change under MTD for Income Tax?
If you fall within MTD, you will need to: 32
- Keep digital records of your income and expenses
- Send quarterly updates to HMRC using recognised software
- Submit an End of Period Statement (EOPS) for each business or property
- Submit a Final Declaration to confirm your overall tax position for the year
This replaces the traditional single annual Self Assessment tax return. We can do this on your behalf for an additional fee so let us know if this is something you’d like us to do for you.
How to get ready now
- Move to digital bookkeeping:
If you’re not doing this already start using cloud accounting software that is (or will be) compatible with MTD. If you’re not sure which software packages meet this requirement you can check the HMRC guidance using this link
Choose the right software for Making Tax Digital for Income Tax – GOV.UK
- Separate business and personal finances:
A dedicated business bank account makes digital record‑keeping far cleaner so this is worth considering if you don’t have one already. - Get into a regular bookkeeping habit:
Quarterly reporting will be much easier if your records are kept up to date. - Check if you’re near a threshold:
If your self‑employment and/or property income is approaching £30,000–£50,000, it’s worth preparing early. - Talk to us at Elevate Accountancy:
We can review your figures, confirm when MTD will apply to you, and help you choose and set up suitable software so you’re ready well before your start date.
We’ve included some references here in case they are of use to you.
References (3)
1 Get ready for Making Tax Digital for Income Tax – when to start. https://makingtaxdigital.campaign.gov.uk/get-ready-for-making-tax-digital/
2 When does Making Tax Digital start for me? https://www.litrg.org.uk/tax-nic/making-tax-digital-income-tax/when-does-making-tax-digital-start-me
3 Making Tax Digital for Income Tax Self Assessment for sole traders and …. https://www.gov.uk/government/publications/extension-of-making-tax-digital-for-income-tax-self-assessment-to-sole-traders-and-landlords/making-tax-digital-for-income-tax-self-assessment-for-sole-traders-and-landlords
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