Making Tax Digital or MTD for Income Tax Self Assessment
Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) will be a requirement from April 2026 (previously April 2023 and then April 2024).
Sole traders and landlords with business or property income above £50,000 per year will need to keep digital records for income tax and Class 4 National Insurance Contributions (NICs) using MTD compatible software and send quarterly opdates.
Those with an income of between £30,000 and £50,000 will need to do this from April 2027.
It’s estimated that over four million taxpayers will need to keep records of their income and expenditure digitally and send a quarterly summary and an end of year report.
The government has not yet confirmed when MTD for ITSA will extend to general partnerships.
However, the government says this remains part of its MTD commitment.
What is MTD for Income Tax Self Assessment?
From 2026 you must send information about qualifying income online for your Self Assessment tax return.
Preparing for ITSA
MTD for ITSA applies if you are:
a UK resident
registered for Self Assessment with up to date returns and payments
a sole trader with income from one or more businesses or a landlord who rents out UK property.
Can anyone sign up now?
If you need to report income from any other sources or receive other payments that are taxable or on which you claim tax relief you must declare otherincome separately.
Signing up for MTD for ITSA
New businesses that want to join the ITSA pilot must first register for Income Tax with HMRC.
You will need to participate from 2026 if your income is over £50,000 and from 2027 of your income is over £30,000.
The government is reviewing arrangements for partnerships and those with income below £30,000.
Signing up - To sign up you will need to:
use MTD-compatible software
keep digital records
send a quarterly update summary of your business income and expenses.
You won’t need to complete a Self Assessment tax return as you do now.
However, you’ll still need to send HMRC a Self Assessment tax return for the 2025/26 tax year before you join MTD for ITSA.
For each quarter you will receive an estimated tax calculation based on the information you have provided to help you budget for your tax. The quarters are:
6 April to 5 July
6 July to 5 October
6 October to 5 January
6 January to 5 April.
You have one month to submit each quarter's information.
Information - You will need to submit details of your invoices and receipts for purchases and, as a minimum, these should include the date, the amount, and the category of income or expense.
If you already use record keeping software you will need to check whether it is MTD-compatible or can be integrated with bridging software to make your quarterly submissions.
If you currently use spreadsheets to keep your records you’ll need MTD-compatible software to send your quarterly updates to HMRC.
What is MTD compatible software?
The software you use to keep your digital tax records will have to communicate with the HMRC’s systems to allow you to file your returns.
If your accounting software is only installed on your office computer you might need to update it.
If you’re using cloud-based accounting software and can access your data at any time and from anywhere it will probably automatically update to meet the requirements for MTD.
Check with your supplier in advance to confirm that your software will meet the requirements of MTD for ITSA.
For your information...
You can find more helpful information on the Chartered Institute of Taxation website.
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