Making Tax Digital (MTD) is one of the biggest changes to the UK tax system in a generation. While many businesses are already familiar with MTD for VAT, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) represents a major shift for sole traders and landlords.
From April 2026, millions of taxpayers will move away from the traditional annual Self Assessment return and into a system of digital record‑keeping and quarterly reporting.
What Is Making Tax Digital for Income Tax?
MTD for ITSA requires individuals with self‑employment and/or property income to keep digital accounting records, use MTD‑compatible software, submit quarterly updates to HMRC and complete an end‑of‑year final declaration.
Who Will Be Affected?
MTD for ITSA applies to individuals, not companies. It affects sole traders and landlords but does not currently apply to limited companies or partnerships. Certain individuals may be exempt due to digital exclusion.
When Will Taxpayers Be Brought Into MTD for ITSA?
The rollout is phased in by gross income (turnover), not profit, from self‑employment and property combined.
From 6 April 2026 – individuals with income over £50,000
From 6 April 2027 – individuals with income over £30,000
From 6 April 2028 – individuals with income over £20,000
HMRC will assess income based on earlier Self Assessment returns to determine when individuals must join.
New Reporting Requirements
Once within MTD for ITSA, taxpayers must keep digital records of income and expenses and submit four quarterly updates each tax year. These updates are summaries and not final tax calculations.
After the fourth update, a final declaration (your usual self-assessment tax return) must be submitted to confirm total income, make adjustments and include any other taxable income. Existing tax payment deadlines remain unchanged.
Penalties
MTD introduces a points‑based penalty system for late submissions. HMRC has confirmed a soft‑landing approach for the first year, with no late‑submission penalties for quarterly updates in 2026/27.
