Are You Required to Join MTD ITSA?
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is mandatory from April 2026 for self-employed/landlord income over £50,000, and from April 2027 for income over £30,000.
Frequently Asked Questions
When does MTD ITSA start?
MTD ITSA is mandatory from April 2026 for those with qualifying income over £50,000, and from April 2027 for income over £30,000. HMRC is expected to extend to £20,000 by April 2028, though this is not yet legislated.
What counts as qualifying income for MTD ITSA?
Qualifying income includes gross self-employment turnover and gross property rental income. It does NOT include employment income, dividends, interest, or pension income for the threshold test.
How often must I submit MTD ITSA updates?
You must submit digital quarterly updates to HMRC — by 5 August, 5 November, 5 February, and 5 May. Plus an End of Period Statement and a Final Declaration by 31 January.
What software do I need for MTD ITSA?
You must use HMRC-recognised MTD-compatible software. Popular options include QuickBooks, Xero, FreeAgent, Sage, Kashflow, and Coconut. Spreadsheets can work with HMRC-approved bridging software.
What if I'm already doing Self Assessment?
Existing Self Assessment taxpayers above the threshold must migrate to MTD ITSA by the relevant April deadline. HMRC is contacting affected taxpayers and running a public beta to help with transition.
Does MTD ITSA replace Self Assessment?
MTD ITSA replaces the annual Self Assessment tax return for qualifying income (self-employment and property). You'll still make a Final Declaration (similar to a tax return) by 31 January but will use MTD software throughout the year.
Are there penalties for late MTD submissions?
Yes. HMRC is introducing a points-based penalty system for MTD ITSA. Each missed quarterly update earns a penalty point; after 4 points a £200 fine applies. Further points add £200 each. Points reset if compliance is restored.
Is the MTD ITSA threshold based on profit or turnover?
The threshold is based on gross income (turnover) — not profit. If your self-employment turnover is £55,000 and you make a loss, you still qualify for MTD ITSA.
Can I get an exemption from MTD ITSA?
HMRC may grant exemptions for those who cannot use digital tools due to age, disability, religion, or living in an area with poor internet access. Apply via HMRC's digital exemption process.
What happens to my accountant under MTD ITSA?
Accountants can still prepare and submit on your behalf using agent credentials in MTD software. Your relationship with your accountant doesn't change — they just need to use MTD-compatible tools.
Does MTD ITSA apply to partnerships?
General partnerships (with two or more individuals) are expected to join MTD ITSA from April 2025 or later — the exact timetable has been deferred. Corporate partnerships (LLPs) have separate requirements.
What is the digital record-keeping requirement?
Under MTD ITSA, you must keep digital records of all business income and expenses. Physical receipts can exist but must be recorded digitally. Banks feeds and receipt scanning apps help automate this.