The UK is moving firmly into the digital era of tax reporting as HMRC continues to roll out its Making Tax Digital (MTD) scheme. VAT has already made the switch, and the next big step- MTD for Income Tax Self‑Assessment (ITSA)- is set to affect millions of self‑employed people and landlords.
With changes starting as early as April 2026, it’s a good time to get familiar with what’s coming, when it applies to you, and how you can prepare.
What is MTD for ITSA?
MTD for Income Tax Self‑Assessment is HMRC’s shift toward a fully digital way of reporting income tax. Instead of relying solely on annual paperwork, you’ll need to keep your records in a digital format, send quarterly updates through approved software, and then complete one final declaration at the end of the tax year.
The idea behind this is to make tax more accurate and to give both you and HMRC a clearer, more up‑to‑date picture of your financial position.
Who will MTD affect?
MTD for ITSA will roll out in stages based on gross income from self-employment and/or property. It is important to note that gross income refers to everything earned before any expenses are deducted.
- 6 April 2026: Gross income over £50,000
- 6 April 2027: Gross income over £30,000
- 6 April 2028: Expected to extend to gross income over £20,000
Some individuals may qualify for exemptions; your accountant or tax advisor can guide you further on this.
What should you do now?
Start by reviewing your gross income to see when the rules apply to you. Preparing early, ideally by moving to an MTD-ready software like Xero– will make the transition much smoother.
If you’re uncertain at any stage, seeking professional advice can help you remain confident as the new requirements take effect.
Contact us today for more information.
