From April 2026, Making Tax Digital for Income Tax Self-Assessment will bring new record-keeping and reporting requirements for sole traders, freelancers and landlords with gross annual income exceeding £50,000.
Individuals earning in excess of £30,000 will need to comply from April 2027, and those earning in excess of £20,000 will be required to comply from April 2028.
What are the key requirements?
For those within scope of the initiative, the key requirements are as follows:
- Register for MTD for ITSA ahead of the mandation deadline
- Use MTD-compatible software to maintain and report income and expense data, to HMRC. Spreadsheets may be used, but they must connect to HMRC via bridging software.
- Submit quarterly updates to HMRC, providing a summary of your income and expenses at more regular intervals.
- Submit a final declaration, in place of a Self-Assessment Tax Return, to finalise your tax position (including any necessary adjustment) and to ensure all sources of income are accounted for.
MTD for ITSA: How to prepare
How you prepare for the upcoming changes will largely depend on whether you currently use software or not.
If you are not already using MTD-compatible software, you will need to transition to doing so. This is best done sooner rather than later, so that you can become familiar with how the system works ahead of mandation.
The likes of Xero, QuickBooks and Sage are all HMRC-approved software for the purposes of MTD.
If you are already using software, then there is no immediate need to act. However you will need to sign up for MTD for ITSA, to be able to submit returns, as HMRC will not automatically register you.
How can George Hay support you?
We understand that the requirements of MTD for ITSA may seem daunting but, with a proactive approach to preparation and the right advisory input, the transition can be a positive experience.
We are on hand to advise and guide you, every step of the way; from choosing and implementing the right software, to ensuring compliance with reporting obligations, our aim is to simplify the process for you as much as possible.
To discuss the changes coming under MTD for ITSA, and to speak to us about how you can prepare to comply with the requirements, contact our team of professionals.
