Making Tax Digital for Income Tax
(MTD for ITSA)

Making Tax Digital requires businesses and individuals to keep digital records and submit tax information using HMRC-recognised software. MTD for VAT is already in force for all VAT-registered businesses. MTD for Income Tax Self-Assessment (MTD for ITSA) begins from 6 April 2026 for sole traders and landlords with qualifying income above £50,000. We are fully MTD compliant and use HMRC-recognised software for all submissions. We onboard new clients onto MTD-compliant bookkeeping software and run a parallel quarter before the first live submission so the process is routine, not a scramble.

Five submissions per tax year, per business or property income source. You file four quarterly updates summarising income and expenses, due one month and seven days after each quarter end, followed by a final declaration after the tax year ends that confirms the figures, applies reliefs and allowances, and replaces the old self-assessment return. If you have both self-employment and property income, each source is reported separately within the same software. We prepare, review and file all of these for you so the increase in frequency does not increase your workload.

You must use software on HMRC's recognised list for MTD for Income Tax. The right choice depends on your income type and volume. Full cloud accounting packages such as Xero, QuickBooks and FreeAgent suit most sole traders and landlords. If you prefer to keep records in a spreadsheet, bridging software can connect it to HMRC, provided the digital links are unbroken. We are not tied to any single vendor - we recommend what fits your situation and set it up for you, so you are not paying for features you will never use.

Yes, but not on their own. A spreadsheet can remain part of your record keeping only where it is connected to HMRC through bridging software with unbroken digital links - meaning no manual re-keying of figures between the spreadsheet and the submission. Typing numbers from a spreadsheet into HMRC's portal by hand does not meet the requirement. For most people a cloud accounting package is simpler and less error-prone than maintaining a compliant spreadsheet-and-bridge setup, but we are happy to support either approach if you have a strong preference.

MTD for Income Tax uses a points-based late submission regime. Each missed quarterly update or final declaration earns a penalty point. Once you reach the points threshold for your filing frequency - four points for quarterly filers - a fixed financial penalty applies, with further penalties for each subsequent late submission while you remain at the threshold. Points are reset only after a period of compliance. Late payment of the tax itself attracts separate interest and penalties. Because the regime penalises each missed deadline rather than just the annual return, the cost of disorganised filing rises sharply. We manage the quarterly calendar so points never accrue.

Very likely. Qualifying income for MTD for Income Tax is your combined gross self-employment and property income, measured before expenses. The two streams are added together to test against the threshold, so someone earning £30,000 from self-employment and £25,000 from rent has £55,000 of qualifying income and falls into the first phase from April 2026, even though neither source alone exceeds £50,000. This catches many people by surprise. We review your most recent filed return to confirm exactly which phase you fall into and from when.

We can typically onboard a new MTD client within two to three weeks - software selected, account set up and historical records migrated. Ideally we then run a parallel quarter before your first official submission, so the earlier you start the smoother the transition. If your phase-in date is close, contact us directly and we will give you an honest assessment of what is achievable and prioritise the steps that keep you compliant from day one. We are used to working to firm HMRC deadlines.