Making Tax Digital for Income Tax Self Assessment, known as MTD for ITSA, is the UK government’s programme to move self-employed people and landlords to digital tax record keeping and quarterly reporting through HMRC-approved software.
If you are a self-employed tradesperson in the UK, this affects you. Here is what you need to know.
What Is Making Tax Digital for Income Tax?
MTD for ITSA requires self-employed individuals and landlords to keep digital records of their income and expenses and submit quarterly updates to HMRC through compatible software, rather than filing a single annual self-assessment tax return.
The intention is to make the tax system more accurate and to spread the reporting burden across the year rather than in one annual rush.
Who Does It Apply to and When?
MTD for ITSA is being rolled out in phases based on income:
From April 2026, it applies to self-employed individuals and landlords with combined income over £50,000 per year.
From April 2027, it will extend to those with income over £30,000 per year.
Further phases covering lower income thresholds are planned, though the specific timelines are subject to change. Check the HMRC website for the most current information.
What Will You Need to Do?
If MTD for ITSA applies to you, you will need to:
Keep digital records. Your income and expense records must be kept digitally using HMRC-compatible software. Paper records and spreadsheets that are not linked to compatible software will not meet the requirement.
Submit quarterly updates. Four times a year, you will submit a summary of your income and expenses to HMRC through your software. These are not tax returns in the traditional sense. They are updates that give HMRC visibility of your position throughout the year.
Submit an end of period statement. At the end of the tax year, you finalise your figures and submit an end of period statement through your software.
File a final declaration. This replaces the traditional self-assessment tax return and confirms your total income and any adjustments.
What Software Do You Need?
You need HMRC-compatible software. Many of the most widely used accounting packages already support MTD for ITSA, including QuickBooks, Sage, and Xero. HMRC maintains a list of compatible software on their website.
If you currently use a basic spreadsheet or paper records, you will need to switch to compatible software. Your accountant may be able to handle this on your behalf through their own software.
What If You Use an Accountant?
Your accountant can manage MTD compliance on your behalf using their own compatible software. If you have an accountant and are approaching the income thresholds, speak to them now about how they plan to handle your MTD obligations. Do not wait until the deadline is imminent.
The Key Takeaway
If you are a UK tradesperson earning over £50,000 per year, MTD for ITSA is relevant to you now. The quarterly reporting requirement means you need compatible software and up-to-date records throughout the year, not just at tax return time.
Getting organised now is significantly easier than scrambling to comply under pressure. Speak to your accountant and get the right software in place.
Written by Maebh Collins
ACA qualified, Dundalk-based. I build websites and write SEO content for trade businesses across Ireland and the UK. If you have questions, get in touch.