Making Tax Digital for Income Tax Self-Assessment (ITSA)
Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) is part of HMRC’s initiative to digitise the tax system in the UK.
It requires individuals who submit Income Tax Self-Assessment tax returns to use compatible software to keep records of income and expenses digitally and send summary updates to HMRC quarterly, with a final return at tax year end to confirm the final figures for the year.
What are the requirements?
HMRC will require those who meet the requirements to file 4 additional returns on a quarterly basis throughout the tax year, using compatible software.
If you have more than one business, separate returns will be required for each business.
It’s important to ensure that you are using MTD compliant software to enable your submissions. HMRC have published details of the software with capabilities for MTD ITSA: https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax
Who is impacted from April 2026? (2026/27 tax year)
You are impacted from April 2026 if you had income from self-employment or property that exceeded £50,000 for the 2024/25 tax year.
Who is impacted from April 2027? (2027/28 tax year)
You are impacted from April 2027 if you had income from self-employment or property that exceeded £30,000 for the 2025/26 tax year.
Who is impacted from April 2028? (2028/29 tax year)
You are impacted from April 2028 if you had income from self-employment or property that exceeded £20,000 for the 2026/27 tax year.
What is qualifying income?
- This is your gross income before deduction of expenses.
- HMRC will consider your income from the previous tax year.
Important notes:
- If a newly self-employed or property business, you will not be required to use MTD until you submit a tax return which includes the income from this business. For example, if you started a new business in May 2026, your self-assessment tax return for the 2026/27 tax year would be due for submission by 31st January 2028 and you would be required to join MTD from April 2028 if you met the criteria stated above. You can however choose to use MTD voluntarily.
- If your accounting period is more or less than 6 months, HMRC will prorate your income to identify as to whether you meet the thresholds. For example, if £30,000 for a 6 month period, this would be £60,000.
- If you own jointly owned property, your qualifying earnings are your share of the turnover.
- Partnership income is not considered as qualifying earnings.
- Transitional profits not considered.
Exemptions:
- Those with no UK NI Number.
- Those for which it’s not practical for you to use software due to age, disability, location.
- Those practicing members of religious societies or orders with beliefs incompatible with electronic communications.
- Those granted with exemption from MTD VAT or if your turnover is below the thresholds.
What information is reported?
Digital records at the minimum should include the following information:
- Date of transaction
- Amount of transaction
- The category of transaction
In addition to this, adjustments will be required in respect of disallowable items (such as private use of mobile phones or other expenses) and to distinguish capital and revenue expenditure.
What will the reporting deadlines be?
The filing deadlines for each period within the tax year are shown below:
- Quarter 1 – Period from 6th April to 5th July – due by 7th August
- Quarter 2 – Period from 6th July to 5th October – due by 7th November
- Quarter 3 – Period from 6th October to 5th January – due by 7th February
- Quarter 4 – Period from 6th January to 5th April – due by 7th May
What can Munro Bowman offer to support our clients?
As we draw closer to the dates for which MTD ITSA is mandatory, we can assist you with getting set up on appropriate accounting software, with the compatibility to make their quarterly submissions.
Please contact us for a friendly, no obligation chat regarding your obligations and how we can assist you with compliance with Making Tax Digital for Income Tax Self-Assessment.
Why choose us?
Our goal is to provide a seamless, stress-free accounting experience. With our dedicated support, industry expertise, and comprehensive services, you’ll have everything you need to keep your business finances in perfect order.
Get in touch today to discuss how we can help your business thrive!
Here to help
Contact us for a friendly, no obligation chat. We’re here to assist you with all of your tax and accountancy requirements.
Based in Bournemouth, UK. We service customers both locally and nationwide remotely, and are ready to help today.
Telephone: 01202 129 890
Email: accounts@munrobowman.co.uk
Munro Bowman Limited
1326 Christchurch Road
Bournemouth, UK
BH7 6ED
