Everything you need to know about MTD for ITSA 2026

With less than a year until Making Tax Digital for Income Tax Self Assessment goes live, we summarise all the information you’ll need.

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the most significant change to the self-assessment regime since its introduction in 1997.

Who’s affected, and when

From 6 April 2026, approximately 795,000 sole traders and landlords earning over £50,000 annually will need to keep digital records, use MTD-compatible software and submit quarterly summaries of their income and expenses to HM Revenue & Customs. 

Those with qualifying income – gross income from self-employment and property before any tax allowances or expenses are deducted – above £30,000 will need to use MTD for ITSA from April 2027. The threshold will then decrease to £20,000 from April 2028.

Quarterly reporting deadlines

MTD for ITSA will fundamentally change the tax reporting rhythm. Practices should embed quarterly reporting into their operational cycle, setting up reminders, checklists and review procedures for each submission period.

The standard quarterly reporting deadlines are:

• 6 April to 5 July
• 6 July to 5 October
• 6 October to 5 January
• 6 January to 5 April

Businesses can elect to report for calendar quarters:

• 1 April to 30 June
• 1 July to 30 September
• 1 October to 31 December
• 1 January to 31 March

The deadlines for quarterly updates will be 7 August, 7 November, 7 February and 7 May following the end of the relevant quarter.

Reporting requirements

Taxpayers will be required to maintain digital records of business and/or property income and expenses, including the following details:

• The amounts and dates of the transaction.
• The category of the expense (which is broadly aligned with those on the Self-Assessment return).

Taxpayers with turnover from either self-employment or property below the £90,000 VAT threshold can choose to submit simplified “three-line accounts” and just categorise each item as either income or expense and net profit.

Landlords will also be permitted to maintain less detailed records for jointly owned properties and will be allowed to avoid submitting quarterly updates for those properties and instead report them when finalising their year-end tax position.

However, separate quarterly updates will be required for each business a taxpayer is involved in so that an individual who is a sole trader and a landlord will need to provide eight quarterly updates each year.

Taxpayers must then complete a final declaration of their tax position through MTD-compatible software at the end of the year – based on the current Self-Assessment return of 31 January. This includes:

• All other sources of income (e.g., employment, dividends, bank interest) that have not already been reported.
• Claiming any relevant reliefs or allowances.

Digital records must not be kept in spreadsheets unless those spreadsheets are API-enabled or used in conjunction with bridging software that allows two-way communication with HMRC systems.

Penalties

Under MTD for ITSA the new points-based penalty regime introduced by HMRC applies to both a failure to submit on time, and late payment of tax.

This regime is already in force for VAT (since January 2023) and will apply to MTD for ITSA from the 2026 start date for relevant taxpayers.

• One point is incurred for each late submission.
• Once a taxpayer reaches a certain threshold, a £200 fixed penalty is issued.
• Further penalties of £200 apply for each additional late submission after the threshold is met.

Thresholds (based on submission frequency):

Points expire:

• After 24 months if the taxpayer remains compliant.
• If the threshold is reached, a period of compliance is required to reset the points total (e.g. 12 months with no late submissions for quarterly obligations).

Beta testing

HMRC expanded its private beta testing for MTD for ITSA on April 16, opening the pilot scheme to agents and eligible clients.

Participating allows practitioners to road-test systems in a live environment and provides valuable experience before the mandatory go-live. Early adopters can spot teething issues, fine-tune workflows, and build confidence ahead of wider rollout.

You can sign up your client voluntarily if all of the following apply: 

• their personal details are up to date with HMRC 
• they’re a UK resident 
• they have a National Insurance number
• they have submitted at least one Self Assessment tax return, or you have done this on their behalf 
• they’re up to date with their tax records: for example, they have no outstanding tax liabilities 
• their accounting period runs from either:
  • 6 April to 5 April
  • 1 April to 31 March (you must make sure you and your client’s software can support this accounting period).

You cannot sign up your client voluntarily if they: 

• have a payment plan with HMRC
• are a partner in a partnership  
• claim Married Couple’s Allowance  
• claim Blind Person’s Allowance  
• are currently, or are going to be, bankrupt or insolvent  
• are an MP, minister of religion or Lloyd’s underwriter  
• have income from being a foster carer or being in a shared lives scheme  
• have income from a trust
• are subject to a compliance enquiry 
• use ‘averaging’ or other arrangements because their profits vary between years, for example, because they’re a farmer, writer or artist.

Taxpayers participating in the beta testing will be subject to the new penalty regime. However, they will not incur any filing penalties for late submissions or quarterly updates during the testing phase. However, the exemption does not extend to the final declaration due by 31 January.

Software

Practitioners and their clients will need to use commercial software that works with MTD for ITSA.

Sole traders with simple income may benefit from free or low-cost options, while landlords and complex businesses might need more advanced tools.

Some software can submit both quarterly updates and year-end tax returns, but other products will only do one, so it’s important to check first.

For example, an individual might create their own digital records and send their quarterly updates but still want their agent to submit their tax return. In this instance, software that sends quarterly updates is sufficient. 

Some software will be able to report all business income sources, whilst others may focus on a specific source. For example, there are products that are designed specifically for landlords.

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