Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is the next stage of digital transformation of the UK tax system. Under MTD ITSA, self-employed individuals and landlords will be legally required to use MTD-compliant software to maintain digital records of their business or property income and expenses, and to make regular quarterly submissions to HMRC. This replaces the traditional single annual Self Assessment tax return.

You will be legally required to use MTD software from the following dates, based on your qualifying income from self-employment and/or property: from April 2026, if your income exceeds £50,000; from April 2027, if your income exceeds £30,000; and from April 2028, if your income exceeds £20,000. "Qualifying income" refers to total gross income before expenses are deducted. For jointly-owned properties, each owner must calculate their individual share of income. Partnerships and companies are not included in this phase of MTD ITSA.

Taxpayers in scope must use software or bridging tools compatible with HMRC's requirements, ensuring that digital links exist between records and the submission tool, as copy-and-paste methods are not sufficient. Each quarter, summary updates of income and expenses must be submitted, and at the end of the tax year, a final declaration must be submitted to reconcile total tax liability. MTD ITSA also introduces a points-based penalty system for late or missed submissions, making timely compliance essential.

Exemptions may be available for individuals who cannot reasonably comply, for example due to disability, lack of internet access, or other serious reasons. The main objectives of MTD ITSA are to improve the accuracy of tax reporting, reduce errors, and help taxpayers stay on top of their liabilities throughout the year while increasing efficiency. Self-employed individuals and landlords approaching or exceeding the income thresholds are advised to prepare early by adopting compliant software, digitising their records, and reviewing their record-keeping processes to ensure a smooth transition and avoid penalties.