From 6 April 2026, the way self-employed people and landlords report income to HMRC is changing. Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) replaces the once-a-year tax return with quarterly digital updates.
It's the biggest change to Self Assessment in a generation. The good news: it's not as scary as the headlines suggest, and if you're already using cloud accounting software, you're most of the way there.
Who is affected and when
The threshold is based on your total income from self-employment plus property, before expenses. So a landlord with £25,000 of rent and a side business turning over £30,000 is in scope from 2026, even though neither income on its own would qualify.
- From April 2026: sole traders and landlords with combined gross income over £50,000.
- From April 2027: those with combined gross income over £30,000.
- From April 2028: those with combined gross income over £20,000 (subject to confirmation).
What you'll have to do
- Keep digital records of all your business and property income and expenses.
- Send a quarterly update to HMRC summarising income and expenses for each business or property income source — four times a year.
- Submit a Final Declaration once a year, confirming the figures and adding any other income (dividends, interest, employment, etc.). This replaces the annual tax return.
- Use HMRC-compatible software for all of the above — spreadsheets are allowed only if connected via 'bridging' software.
What hasn't changed
Quarterly updates are not quarterly tax bills. You still pay tax twice a year — by 31 January and 31 July — under the existing payments-on-account system. The deadlines and penalties for paying tax late are unchanged.
What you can claim as expenses, how trading allowances work and the basis-period rules are also unchanged — only the reporting mechanism is new.
What you should do now
- Check whether you'll be in scope: add up your self-employment and property income (gross, before expenses) for the most recent tax year.
- If you're in scope, start using compatible software now — Xero, FreeAgent and others all have MTD for ITSA modules.
- Get your record-keeping habits in place: no more shoeboxes of receipts in March.
- Talk to your accountant about who files the quarterly updates — most accountants (us included) will do this as part of an MTD service.
Need a hand?
We're a Xero Gold Partner and we're already moving clients onto MTD-ready workflows. If you'd like a no-pressure chat about whether you're affected and what to do, get in touch.
Frequently asked questions
- Do I have to use Xero?
- No. Any HMRC-recognised software will do — there's a list at gov.uk. We work mostly with Xero because it suits our clients, but the rules don't force a particular product.
- What happens if I'm under the £50,000 threshold?
- You'll continue with the existing annual Self Assessment system for now, but you'll be brought in when the threshold drops in April 2027 (£30k) or 2028 (£20k). Many people choose to move early so they're not scrambling later.
- What about partnerships and limited companies?
- Partnerships are expected to join MTD for ITSA at a later date, with no firm timetable yet. For limited companies, HMRC confirmed in its July 2025 Transformation Roadmap that Making Tax Digital for Corporation Tax will not go ahead in its previously planned form. Companies still need to file annual CT600 returns and keep accurate digital records, but there is no quarterly MTD requirement on the horizon.
Need help with your tax affairs?
We help SMEs, tradespeople, landlords and start-ups across Yorkshire stay on top of HMRC. Friendly, jargon-free and fixed-fee.
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