Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is a UK government initiative aimed at simplifying tax reporting for self-employed individuals and landlords. Here’s a straightforward guide to help you understand the essentials:

What Is MTD for ITSA?

  • A system requiring digital record-keeping of income and expenses.
  • Mandates quarterly updates to HM Revenue and Customs (HMRC) using compatible software.

Who Needs to Comply?

  • From April 2026:
    • Self-employed individuals and landlords with annual gross income over £50,000.
  • From April 2027:
    • Those with annual gross income over £30,000.

Key Requirements

  • Digital Record-Keeping:
    • Maintain electronic records of all business income and expenses.
  • Quarterly Updates:
    • Submit cumulative summaries of income and expenses every three months.
    • Deadlines are typically one month and seven days after each quarter ends.
  • End-of-Period Statement:
    • At the end of the tax year, confirm and finalize your tax information by 31 January.

Exemptions

  • Individuals with annual gross income below £30,000 are currently exempt.
  • Certain exemptions apply for reasons such as age, disability, or religious beliefs incompatible with digital record-keeping.

How to Prepare

  • Select Compatible Software:
    • Choose HMRC-approved software for digital record-keeping and submissions.
  • Understand Reporting Periods:
    • Familiarize yourself with quarterly reporting deadlines.
  • Seek Professional Advice:
    • Consult with an accountant to ensure compliance and efficient transition.

For detailed guidance, visit the official HMRC page: Use Making Tax Digital for Income Tax

By adhering to these guidelines, you’ll be well-prepared for the upcoming changes in tax reporting.

Accounts & Tax Made Easy