Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is a UK government initiative that requires certain self-employed individuals and landlords to keep digital records and submit quarterly updates of their income and expenses to HM Revenue & Customs (HMRC) using compatible software, instead of filing a traditional annual Self Assessment tax return.

‍

Key Features and Requirements:

‍

Who is Affected and When:

• From 6 April 2026, MTD ITSA will be mandatory for self-employed individuals and landlords with qualifying income of at least £50,000 per year.
• From 6 April 2027, the threshold lowers to £30,000 per year.
• From 6 April 2028, the threshold lowers to £20,000 per year.
• Qualifying income is the total gross income from self-employment and property (including both UK and foreign property income for UK residents) before expenses are deducted. Other types of income, such as employment income, partnership profits, and dividends, do not count towards this threshold.

‍

Digital records:

• Affected taxpayers must use "functional compatible software" to keep digital records of their business and property income and expenses. The software must be able to record, preserve, and submit information to HMRC via an API platform, as specified in a software notice issued by HMRC.
• Digital records must be maintained for each business or property business, and preserved until the end of the relevant period as required by law.

Quarterly updates:

• Taxpayers must submit quarterly updates to HMRC, summarizing their income and expenses for each quarter. The deadlines and periods for these updates are defined in the regulations.
• For jointly owned property, owners can choose to report either both income and expenses or just income for each quarterly update period. There are specific easements for those with turnover below the VAT threshold, allowing less detailed categorization of record

‍

Annual declaration:

At the end of the tax year, taxpayers must make a final declaration (end of period statement) to confirm their income and claim any reliefs or allowances. This replaces the traditional Self Assessment tax return for those within MTD ITSA.

Transitions and exemptions:

• The digital requirements come into force for existing businesses on 6 April 2026. For new businesses started on or after 6 April 2025, the digital start date is 6 April in the year following the year in which the first tax return is required.
• There are exemptions for certain individuals, such as those unable to use digital tools due to age, disability, or remoteness of location