Let’s Break This Down Together...
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the most significant shift in the UK’s tax system for generations. It marks the government’s next step in modernising tax for the digital age designed to make income tax administration more accurate, efficient, and less stressful.
The new rules will apply from April 2028 to anyone with total qualifying income of £20,000 or more from self-employment or property income.
That means more self-employed individuals, sole traders, and landlords will soon need to use MTD-compatible accounting software to maintain digital records and submit quarterly updates directly to HMRC’s systems.
Instead of filing one self assessment tax return each year, you’ll be sending digital updates every quarter giving you a clear, up-to-date picture of your tax position all year round.
If that sounds complicated, don’t worry. Pie tax is here to make tax digital for income as easy as pie.
The Biggest Change to UK Tax in Generations
The government’s Making Tax Digital programme is reshaping how we all interact with HMRC. Initially planned for 2024 and later adjusted to begin in stages from 2026, the rollout will now include earners of £20,000+ from April 2028.
It’s part of HMRC’s long-term plan to modernise income tax self assessment creating a system that’s more accurate, efficient, and accessible for everyone.
To comply, you’ll need to:
- Keep your income and expense records digitally
- Use approved MTD-compatible software or bridging software
- Submit quarterly updates rather than a single yearly tax return
There’s a growing choice of software products, both free and paid, developed by the software industry in partnership with HMRC to support small businesses and those with straightforward affairs.
Why HMRC Is Going Digital and What It Means for You
The move to Making Tax Digital for Income Tax is about bringing the UK tax system into the modern world.
By replacing paper records with digital tools and quarterly reporting, HMRC aims to:
- Reduce errors and missed entries
- Help taxpayers get their income tax right the first time
- Provide a clearer view of your tax position throughout the year
- Ease the administrative burdens that come with traditional self assessment
For most self-employed individuals and landlords, it means less end-of-year stress and more control. By using digital record keeping and MTD-compatible accounting software, you’ll always have a real-time view of your income, expenses, and estimated tax — helping you plan ahead confidently.
What exactly is MTD for ITSA?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC’s plan to modernise the UK tax system by making it fully digital. The goal is to make tax administration more effective, accurate, and straightforward while helping taxpayers get their tax right the first time.
Instead of filing one annual Self Assessment tax return, you will use MTD-compatible software to keep digital records of your income and expenses. Every transaction and detail from your income sources, such as trading or property, must be stored digitally to meet MTD requirements.
You will then submit quarterly updates to HMRC throughout the tax year, giving you a clearer and more accurate view of your tax position as you go. This means no more waiting until January to know what you owe or worrying about missed receipts.
The MTD for ITSA rules will be introduced in stages:
- From April 2026, for anyone earning £50,000 or more in total qualifying income
- From April 2027, for those earning £30,000 or more
- From April 2028, for those earning £20,000 or more from self-employment or property income
This gradual rollout allows businesses and individuals time to prepare, find suitable accounting software, and adapt to digital record keeping.
By keeping everything stored digitally and updating HMRC regularly, you’ll always have a real-time picture of your tax position. It’s designed to help you stay in control, avoid surprises, and manage your finances with confidence.
Who needs to comply with MTD for ITSA?
You must follow MTD for ITSA rules if you are self-employed or a landlord and your total qualifying income meets the relevant threshold for your start date. This includes income from trading, property, or a combination of both.
If you have multiple sources of income, you will need to submit quarterly updates for each. Sole traders and landlords must keep their records digitally and use approved accounting software to send information directly to HMRC’s systems.
If your income exceeds the threshold for the first time, you will need to comply with MTD for ITSA from the third tax year after you cross it.
General partnerships with income above £50,000 will join the scheme from April 2028. Limited companies are not affected, as they already use Making Tax Digital for VAT.
If your income is below £20,000, you won’t be required to join, but you can opt in voluntarily if you want to start digital record keeping early.
Non-resident companies and those classed as digitally excluded (for example, due to age, disability, or location) may be exempt from MTD for ITSA, subject to HMRC approval.
MTD Rollout: When Does It All Kick In?
The MTD for ITSA timeline has been revised several times, but the current schedule is now fixed. April 2026 marks the start for businesses and landlords with income over £50,000. The relevant tax years determine when you must comply, as your income and turnover in specific tax years affect your inclusion and deadlines for MTD.
Those with income between £30,000-£50,000 will join in April 2027. General partnerships with income above £50,000 begin using the system from April 2028.
Once in the system, you’ll need to submit updates to HMRC after each quarter. This quarterly reporting process requires you to submit quarterly reports, which must be submitted quarterly within one month after each quarter ends. You’ll also complete an end of period statement and final declaration annually.
Until your mandatory start date, you’ll continue using the traditional Self Assessment system. This gives you time to prepare and adjust your record-keeping practices.
Going Digital: What Records You’ll Need to Keep
Under MTD for ITSA, you must keep records of income and expenses digitally. You’ll need to use MTD-compatible software for this purpose. Your software must connect to HMRC's systems to enable digital submissions.
Digital links must exist between all parts of your record-keeping system. Your submissions will go directly from your software to HMRC. There are various tax digital software options available, including free software products developed by the software industry in collaboration with HMRC to help small businesses and straightforward taxpayers comply with MTD requirements.
You can still use spreadsheets if they’re connected to HMRC via bridging software. Paper receipts remain valid, but their information needs transferring to your digital records. Adapting to digital record-keeping may introduce administrative burdens for some businesses, such as additional compliance steps and ongoing costs.
When I first heard about these requirements, I worried about scanning hundreds of receipts. Thankfully, you won’t need to scan every receipt – just record the details digitally in your chosen software.
Quarterly Updates: What You’ll Need to Submit
With the introduction of MTD for Income Tax, you’ll need to submit quarterly updates to HMRC using approved, MTD-compatible software. Each update will include a summary of your income and expenses for every business or property income source you have, organised in a way that’s similar to the current self assessment tax return.
These quarterly updates are designed to keep your tax position accurate and up-to-date throughout the tax year, helping you avoid surprises and stay compliant with income tax rules.
For each tax year, you’ll need to submit your updates by the deadlines set for the tax year quarters: 7 August, 7 November, 7 February, and 7 May. It’s important to ensure your digital record keeping is thorough and that you use compatible software to submit your information.
This not only helps you meet HMRC’s requirements but also makes it easier to track your property income, business expenses, and overall tax return data.
Final Declaration: End-of-Year Process
After you’ve submitted your four quarterly updates for the tax year, the next step is the Final Declaration. This is a crucial part of the MTD for Income Tax process, as it replaces the traditional self assessment tax return. The Final Declaration is where you review all your income and expenses for the year, make any necessary accounting adjustments, and confirm your final tax position with HMRC.
You’ll need to use MTD-compatible accounting software or bridging software to submit your Final Declaration, ensuring all your digital records are accurate and complete.
The deadline for this submission is 31 January following the end of the tax year, just like the current self assessment system. Getting your Final Declaration right is essential for self employed individuals and landlords, as it determines your final tax liability and helps avoid any delays or penalties.
How to prepare for MTD for ITSA
While 2026 might seem distant, starting preparations now will make the transition smoother. Research MTD-compatible software options that suit your business needs. Using prewritten templates and digital tools can help save time when communicating with clients about MTD. The software industry is working closely with HMRC to provide solutions for all taxpayers.
Review your current record-keeping methods and identify necessary changes. Speak with your accountant about their plans for supporting MTD clients.
Consider the costs of new software and any training you might need. Many software providers offer free trials, so you can test different options before committing. Free software products are available for those with straightforward affairs, making compliance more accessible for individuals with simple tax situations.
Some basic MTD-compatible software packages start from as little as £5 per month. If you’re comfortable with the idea, consider joining the MTD for ITSA pilot scheme to get ahead.
