Making Tax Digital – Changes to Income Tax Self Assessment (MTD ITSA)
What Is Changing?
From April 2026, HMRC is introducing major changes to the way Income Tax Self Assessment (ITSA) must be submitted. These changes are part of the government’s Making Tax Digital (MTD) programme, designed to modernise the tax system and reduce errors.
If you are a sole trader, landlord, or self‑employed individual with a total turnover above £50,000, you will be required to follow the new rules. HMRC has already begun sending letters to those who fall within the first phase of the rollout.
Further expansions are planned for April 2027 and April 2028, meaning more taxpayers will gradually be brought into the system.
What Is Making Tax Digital for Income Tax?
MTD for Income Tax Self Assessment replaces the traditional annual tax return with a fully digital reporting system. HMRC’s aim is to:
‑ make it easier for taxpayers to get their tax right
‑ provide business owners with more up‑to‑date financial information
‑ reduce errors caused by manual record keeping
Under MTD, you will keep digital records and submit updates to HMRC using approved software.
Who Will Be Affected?
You must follow MTD ITSA rules if your combined turnover from:
- sole trade
- UK property
- overseas property
- self-employment
meets HMRC’s phased thresholds:
MTD ITSA Turnover Thresholds
- From April 2026: £50,000
- From April 2027: £30,000
- From April 2028: £20,000
HMRC has already begun contacting taxpayers who fall into the first phase (over £50,000). Even if you are not affected in 2026, the threshold will reduce over the following two years, meaning more individuals will be required to join the MTD system.
What Will Change?
1. Quarterly Submissions
Instead of submitting one annual tax return, you will need to send four quarterly updates to HMRC. These updates summarise your income and expenses for each period.
Quarterly deadlines for the first year (starting April 2026):
| Update Period | Submission Deadline |
|---|---|
| 6 Apr – 5 Jul 2026 | 7 Aug 2026 |
| 6 Jul – 5 Oct 2026 | 7 Nov 2026 |
| 6 Oct – 5 Jan 2027 | 7 Feb 2027 |
| 6 Jan – 5 Apr 2027 | 7 May 2027 |
At the end of the tax year, you will submit a Final Declaration, which replaces the current annual Self Assessment tax return.
Important: Even though you will submit four updates, tax payments remain the same — due by 31 January, with Payments on Account still due by 31 July where applicable.
2. Submissions Must Be Made Using HMRC‑Recognised Software
From April 2026, the only way to submit your information to HMRC will be through approved MTD software.
There will be several software options available. Your tax adviser can help you choose the most suitable one based on your business type and record‑keeping needs.
What Happens If I Don’t Comply?
MTD ITSA is mandatory. There will be no alternative submission method.
HMRC will operate a points‑based penalty system. Points are issued for:
‑ late quarterly submissions
‑ late final declarations
‑ late payments
‑ failing to use approved software
Once you reach a certain number of points, financial penalties will apply. With four submissions per year, it’s easy for points to accumulate quickly if deadlines are missed.
We’re Here to Support You
Our MTD specialists have been preparing for these changes and are ready to guide you through the transition. We have researched the best software solutions and developed processes to help you stay compliant.
We will continue to share updates through our social media channels and newsletters.
What Do I Need to Do Now?
If you are already a client, we will contact you directly if we believe you fall within the first phase of MTD ITSA.
We have also prepared a detailed FAQ to help answer common questions.
To help you understand the changes, we are hosting free MTD seminars, covering:
‑ what MTD means for you
‑ how quarterly submissions work
‑ what software you will need
‑ how we can support you
Spaces are limited, so early booking is recommended.
If you are not yet a client, we offer a free, no‑obligation meeting to discuss your situation and provide a tailored proposal.