Making Tax Digital for Income Tax Self-Assessment (MTD-ITSA)

🔍 What is MTD-ITSA?

Making Tax Digital for Income Tax Self-Assessment (MTD-ITSA) is a major change by HMRC that affects how individuals and landlords report income and expenses. It will replace the traditional Self-Assessment tax return for certain taxpayers starting April 2026. Our team of accountants here at ASBA Accounting are ready to help you prepare and make the switch, but in the meantime, read on for all the key information you need to know now.

📅 Key Dates:

• Now – Start preparing by using MTD-compatible software.

• April 2026 – MTD-ITSA becomes mandatory for self-employed individuals and/or landlords with a combined income of over £50,000

• April 2027 – Applies to those with the above income sources between £30,000–£50,000

(Note: Those earning under £30,000 will not need to follow MTD rules for now; however, the scheme will be expanded in the coming years.)

✅ Who is Affected?

You’ll be affected if:

• You are self-employed and/or a landlord, and:

• Your gross income (before expenses) from these sources exceeds £50,000 from April 2026 (or £30,000 from April 2027)

You are not affected if:

• You earn less than £30,000 total from self-employment and/or property, or:

• You are employed and only file for investment income or other reasons (unless income from self-employment/property exceeds the thresholds)

🔧 What Will Change?

Current System:	Under MTD-ITSA:
File one Self-Assessment return a year	Submit 4 quarterly updates, an End of Period Statement (EOPS), and a Final Declaration
Can use spreadsheets or paper	Must use MTD-compatible software
Submit figures manually	Submit directly via software

📊 Example 1: Self-Employed Sole Trader – Over Threshold

Current situation:

• Sarah runs a graphic design business.

• She earns £65,000 per year in revenue.

From April 2026:

• Sarah must keep digital records of all business income and expenses.

• She must submit:

  • Quarterly updates (every 3 months)

  • An End of Period Statement (EOPS) to finalise her business income

  • A Final Declaration that replaces her Self-Assessment return

    
    

Timeline Example:

Period Covered:	Due Date for Quarterly Update:
6 April – 5 July	5 August
6 July – 5 October	5 November
6 October – 5 January	5 February
6 January – 5 April	5 May
End of Period Statement	31 January (following year)
Final Declaration	31 January (following year)

🏠 Example 2: Landlord with Rental Income

Current situation:

• Tom owns two properties and earns £32,000 in annual rent.

• He also has a part-time job.

From April 2026:

• As his property income is below £50,000, Tom is exempt from the new MTD rules for this tax year.

From April 2027:

• As his property income exceeds £30,000, Tom must follow MTD rules.

• He’ll need to:

  • Keep digital records of rental income and expenses

  • Submit quarterly updates for rental income

  • File EOPS and Final Declaration

❗Important Note: What Counts as Qualifying Income?

To determine if you must comply with MTD for Income Tax Self-Assessment, HMRC will look at your total gross income from:

• Self-employment

• Rental property (UK or overseas)

This means if you:

• Earn £25,000 from self-employment and

• Earn £30,000 from rental property

Your combined income is £55,000 — which is above the £50,000 threshold, and you will need to follow MTD-ITSA rules from April 2026.

👉 Remember, it is the total gross income before expenses that matters — not your profit.

💬 FAQs

Q: Can I still use spreadsheets?

A: Only if they link to MTD-compatible software that can submit updates to HMRC.

Q: Will I pay tax more often?

A: No – tax payment deadlines remain unchanged. The changes only affect reporting, not payment dates.

Q: Is there any penalty if I miss a quarterly update?

A: Yes. A new points-based penalty system will apply for late submissions, so staying on time is important.

💼 What Should You Do Now?

ASBA Accounting recommends:

1. Check your income – Are you above the £50k or £30k thresholds?

2. Start using MTD-compatible software – We can help you choose and set it up.

3. Consider quarterly bookkeeping support – To ensure timely and accurate updates.

4. Talk to us – Our experienced accountants are here to make this transition smooth and stress-free.

🧠 Need Help? Let ASBA Accounting Guide You!

At ASBA Accounting, our trusted and experienced accountants are here to help your transition to the new Making Tax Digital for Income Tax Self-Assessment system as seamless as possible. Our range of digital accountancy support and services include:

• MTD software setup and training

• Quarterly tax submissions

• Year-end EOPS and Final Declaration support

• Full digital record-keeping solutions

📞 Contact ASBA Accounting today for professional advice from Crawley’s MTD-ITSA experts.