Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA): Do You Need to Register?
- Kieran Thwaites
- May 13, 2025
- 7 min read
Updated: 5 days ago
Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is the biggest change to how sole traders and landlords report their income in a generation - and the first taxpayers are brought into it from April 2026. If you're self-employed, let a property, or both, the question on your mind is probably a simple one: does this actually apply to me, and if so, when?
This guide answers exactly that. It continues our series of simple explainers, and it pairs naturally with our Essential Guide to Self-Assessment for the Self-Employed if you're still getting to grips with the current system.
Below, we'll walk through a plain-English decision tree to check whether you need to register, explain what changes, and show you what to do next - with no jargon and a couple of worked examples along the way.
📋 Table of Contents
🔍 What Is MTD for ITSA?
Making Tax Digital for Income Tax is HMRC's move away from the once-a-year tax return. Instead of totting everything up after the year ends, affected taxpayers will keep digital records and send HMRC quarterly updates using compatible software, then confirm the year with a single Final Declaration.
It doesn't change how much tax you pay or when you pay it - it changes how often you report and the tools you use to do it. The aim, in HMRC's words, is fewer errors and a clearer running picture of your tax position through the year.
📅 Key Dates
MTD for ITSA is being switched on in stages, based on your income:
Now - Start preparing. If you're near a threshold, get onto MTD-compatible software early so the switch is painless.
6 April 2026 - Mandatory for sole traders and/or landlords with qualifying income over £50,000.
6 April 2027 - Extends to those with qualifying income over £30,000.
6 April 2028 - Extends again to those with qualifying income over £20,000.
If your qualifying income is under £20,000, you're not mandated for now - though HMRC has signalled the scheme will keep widening, and you can choose to join voluntarily in the meantime.
✅ Do You Need to Register? A Simple Decision Tree
Work through these four steps in order.
Step 1 - Do you have the right type of income?
MTD for ITSA only applies to two income sources:
Self-employment (sole traders - including CIS subcontractors)
Property (UK or overseas rental income)
If you don't have either - for example, you're employed and only file a return for savings, dividends or other reasons - MTD for ITSA does not apply to you. You carry on as normal.
Step 2 - Add up your gross income from those sources
Add together the gross income - that's your turnover before expenses, not your profit - from all your self-employment and property sources combined. This single combined figure is what HMRC calls your qualifying income.
Step 3 - Check which band you fall into
Your combined qualifying income | You're mandated from |
Over £50,000 | 6 April 2026 |
£30,001 – £50,000 | 6 April 2027 |
£20,001 – £30,000 | 6 April 2028 |
£20,000 or under | Not yet - voluntary sign-up only |
Step 4 - Which year's figures does HMRC use?
HMRC decides whether you're in by looking at the qualifying income on your most recent Self-Assessment tax return before the start date. So for the April 2026 launch, it's the figure from your 2024/25 return (the one filed by 31 January 2026) that determines whether you're in the first wave.
That's an important quirk: it means your obligation for April 2026 is set by income you've already reported - so it's worth checking that return now rather than waiting.
Quick check: Right type of income, combined gross figure over the threshold for that year, and it showed up on your last return? Then yes - you'll need to register and be ready with software before your start date.
🧮 What Counts as "Qualifying Income"?
This is where people most often trip up, so it's worth being crystal clear. Qualifying income is the total gross income - before any expenses - from self-employment and property combined.
For example:
£25,000 from a self-employed trade, plus
£30,000 from rental property
= £55,000 combined
Even though neither source on its own is above £50,000, the combined figure is - so this taxpayer is mandated from April 2026. 👉 Remember: it's total gross income that counts, not your profit, and the two sources are added together.
🔧 What Actually Changes?
Here's the current system versus MTD for ITSA, side by side:
Now | Under MTD for ITSA |
One Self-Assessment return a year | Four quarterly updates, plus a Final Declaration |
Spreadsheets or paper are fine | Must keep digital records in MTD-compatible software |
Type figures in manually | Submit directly from the software to HMRC |
Your four quarterly updates follow the tax year, and each one is cumulative (it covers the year so far, building on the last). The deadlines are the 7th of the second month after each quarter ends:
Quarter covered | Deadline |
6 April – 5 July | 7 August |
6 July – 5 October | 7 November |
6 October – 5 January | 7 February |
6 January – 5 April | 7 May |
Final Declaration (2026/27) | 31 January 2028 |
You can elect to use calendar quarters (ending 30 June, 30 September and so on) instead - the same 7th-of-the-month deadlines apply. That's often tidier if you're already on calendar-quarter VAT.
One update worth flagging: you may see older guides mention an End of Period Statement (EOPS). That separate step has been scrapped - its job is now rolled into the Final Declaration, so it's one less thing to file at year-end.
🧾 Worked Example 1: Sarah, the Sole Trader
Sarah runs a graphic design business and turns over £65,000 a year.
Because that's above £50,000, she's in from April 2026.
From April 2026, Sarah must:
Keep digital records of all her business income and expenses.
Submit a quarterly update by 7 August, 7 November, 7 February and 7 May.
File a Final Declaration by 31 January 2028 to confirm her 2026/27 figures - this replaces her old Self-Assessment return.
Her actual tax bill and payment dates don't change - just how and how often she reports.
🏠 Worked Example 2: Tom, the Landlord
Tom owns two rental properties earning £32,000 a year, alongside a part-time job.
His property income is below £50,000, so he's not in the first wave.
But because it's above £30,000, he is mandated from April 2027.
From April 2027, Tom will keep digital records of his rental income and expenses, submit quarterly updates for the property business, and file a Final Declaration each year. His employment income is dealt with through PAYE as usual - MTD for ITSA only covers the rental side. If you're weighing up how best to hold property, our guide to owning rental property through a limited company is a useful companion read.
⚠️ Common Mistakes to Avoid
Only looking at one income stream. The threshold is your self-employment and property income combined - it's easy to slip over it without realising.
Using profit instead of gross income. HMRC looks at turnover before expenses, so your figure is higher than you might expect.
Assuming spreadsheets are banned. They're fine - as long as they're linked to MTD-compatible bridging software that can submit to HMRC.
Leaving software until July. There's no penalty for registering late, but your first update is due 7 August 2026. Set up and test your software before April so you're not scrambling.
Forgetting separate records per source. A sole trader who's also a landlord keeps two sets of digital records and files two sets of updates.
💬 Frequently Asked Questions
Can I still use spreadsheets? Yes - but only if they link to MTD-compatible software that can submit your updates to HMRC. A standalone spreadsheet on its own won't meet the rules.
Will I have to pay tax more often? No. Payment deadlines are unchanged - payments on account remain due 31 January and 31 July. MTD changes reporting, not when you pay.
Do I still fill in a Self-Assessment return? Not in the old form. The Final Declaration replaces it, drawing together all your income (including employment, savings and dividends) to finalise the year.
What if I miss a quarterly update? HMRC has confirmed a soft landing for the first year: no penalty points for late quarterly updates during 2026/27. After that, a points-based penalty system applies. Note that late-payment penalties and Final Declaration penalties still apply throughout - so it's not a free pass.
I'm under the threshold - can I join anyway? Yes. Voluntary sign-up is open, and it's a low-risk way to learn the workflow before it becomes mandatory for you. Penalty points don't apply while you're volunteering.
What about partnerships? Partnerships are not yet mandated - their entry date is still to be confirmed by HMRC.
💡 Key Takeaways
MTD for ITSA applies to sole traders and landlords above HMRC's income thresholds - £50k from April 2026, £30k from April 2027, £20k from April 2028.
"Qualifying income" is your combined gross self-employment and property income, before expenses.
It replaces one annual return with four quarterly updates plus a Final Declaration, filed from digital software.
The EOPS step has gone, and quarterly deadlines fall on the 7th (August, November, February, May).
There's no penalty for registering late, but get software ready before April so you're set for the 7 August 2026 deadline.
💼 What Should You Do Now?
Check your last return. Is your combined gross income above £50k (or £30k / £20k for the later waves)?
Choose your software. Pick an MTD-compatible package now - we can help you select and set it up.
Get your bookkeeping quarterly-ready. Keeping records current through the year is the real shift; a light routine beats a year-end scramble.
Talk to us. We'll map out your start date and get you comfortably ahead of it.
📞 Need Help? Let ASBA Accounting Guide You
At ASBA Accounting, our experienced team makes the move to Making Tax Digital as smooth and stress-free as possible - from software setup and training to quarterly submissions and your year-end Final Declaration.
👉 Get in touch today or call us on 01293 525656 for professional advice from Crawley's MTD for ITSA specialists.
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