Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the biggest shake-up to the self-assessment tax system since it was introduced in 1997. If you’re a sole trader or landlord, here’s what you need to know — and when.
Who Does MTD for ITSA Affect?
MTD for ITSA is being rolled out in stages based on annual qualifying income (gross income from self-employment and property, before expenses or allowances are deducted):
From 6 April 2026 — sole traders and landlords earning over £50,000 per year (approximately 795,000 people)
From April 2027 — those earning over £30,000
From April 2028 — those earning over £20,000
Key Reporting Deadlines
MTD for ITSA fundamentally changes how and when you report to HMRC. Instead of a single annual return, you’ll need to submit quarterly updates throughout the year.
Standard quarters:
Period 6 April – 5 July Submission Deadline on 7 August
Period 6 July – 5 October Submission Deadline 7 November
Period 6 October – 5 January Submission Deadline 7 February
Period 6 January – 5 April Submission Deadline 7 May
If you prefer to work to calendar months, you can elect to report on calendar quarters instead (1 April–30 June, 1 July–30 September, and so on), with the same submission deadlines applying.
What Do You Need to Report?
Each quarterly update must include digital records of your business and/or property income and expenses, covering the amount and date of each transaction and the expense category (broadly aligned with the existing self-assessment return).
Simplified reporting: If your turnover from self-employment or property is below the £90,000 VAT threshold, you can submit “three-line accounts” — simply categorising each item as income or expense, plus net profit.
Landlords with jointly owned properties don’t need to include expenses in quarterly updates. They can report these when finalising their year-end position, but they must still submit income each quarter.
Running multiple businesses? You’ll need to submit a separate quarterly update for each one. A sole trader who is also a landlord, for example, will need to submit eight quarterly updates per year.
At the end of the tax year, you’ll also need to complete a final declaration through MTD-compatible software (replacing the current self-assessment return, with a deadline of 31 January). This is where you report any other income sources — such as employment, dividends, or bank interest — and claim any relevant reliefs or allowances.
Important note on spreadsheets: You cannot use standard spreadsheets to keep your digital records unless they are API-enabled or used alongside bridging software that connects to HMRC’s systems.
Penalties for Late Submissions
MTD for ITSA uses the same points-based penalty regime already in place for VAT (since January 2023). Here’s how it works:
Each late submission earns one penalty point
Once you reach the threshold (four points for quarterly filers), a £200 fixed penalty is issued
Every additional late submission after that triggers a further £200 penalty
Points expire after 24 months of continued compliance
If you hit the threshold, you’ll need a sustained period of compliance (12 months of on-time submissions for quarterly obligations) to reset your points to zero
The same points-based approach also applies to late payment of tax.
Getting Ready: Software and Beta Testing
Software
You’ll need to use HMRC-approved commercial software to comply with MTD for ITSA. When choosing a product, consider the following:
- Sole traders with straightforward income may find free or low-cost options sufficient
- Landlords and more complex businesses are likely to need more advanced tools
- Some software handles both quarterly updates and the year-end final declaration; other products cover only one, so check before you commit
- Some tools cover multiple income sources; others are designed for specific use cases (for example, dedicated landlord software)
If you use an accountant or agent, make sure your software and theirs are compatible. For instance, you might handle your own quarterly updates but still want your agent to submit your final declaration — in which case, quarterly update software alone is sufficient on your side.
Beta Testing
HMRC expanded its private beta for MTD for ITSA in April, opening the pilot to agents and eligible clients. Joining the pilot allows you to test systems in a live environment, identify any issues early, and build confidence ahead of the mandatory go-live date. It’s worth considering if you want to get ahead of the curve.
MTD for ITSA is coming, and preparation is everything. Whether you’re a sole trader, a landlord, or an accountant supporting clients, now is the time to review your record-keeping processes, choose the right software, and get familiar with the new quarterly reporting rhythm. If you’re not sure where to start, we’re here to help. Get in touch with our team today for straightforward, jargon-free advice on getting MTD-ready — the sooner you act, the smoother the transition will be.
