Making Tax Digital for Income Tax Self Assessment (MTD ITSA) goes live from April 2026. If you are self employed, a sole trader, or a landlord with qualifying income above £50,000, you must comply from the start. If your income is between £30,000 and £50,000, your deadline is April 2027. Below £30,000, you are not currently mandated, but voluntary entry is open.

This is not a future possibility. The legislation is passed. HMRC is building the digital infrastructure now. The first quarterly update for the 2026/27 tax year is due by 5 August 2026. If you are in scope, you need to act before April 2026, not after.

This article covers exactly who is in scope, what you need to do, which software works, and how to prepare without last minute panic. As ICAEW qualified accountants, we have been working through the MTD transition with clients across every sector, from freelance consultants in Shoreditch to landlord portfolios in Leeds and tradespeople in Bristol. The principles are the same. The preparation is what varies.

What Is MTD ITSA Exactly?

MTD ITSA replaces the current annual self assessment tax return with a system of quarterly digital updates to HMRC. You will send a summary of your income and expenses every three months using MTD compatible software. At the end of the year, you submit an End of Period Statement (EOPS) and a final declaration to confirm the figures.

You still file one annual tax return at the end. But instead of reconstructing a full year's numbers from shoebox receipts in January, you submit four quarterly updates as you go. HMRC gets visibility of your tax position earlier. You get a clearer picture of your tax liability before the year ends.

The quarterly updates are not tax returns. They are data submissions. HMRC uses them to calculate a cumulative tax position, but you do not pay tax quarterly under MTD ITSA unless you already make payments on account. Those payments on account continue as normal.

Who Must Comply with the MTD ITSA April 2026 Deadline?

The mandatory population from April 2026 is self employed individuals, sole traders, and landlords (including those with UK property income) whose total qualifying income from these sources exceeds £50,000 per year. This is measured on the latest completed tax return. If your 2024/25 return showed £55,000 in self employment profit and £5,000 in property income, your qualifying income is £60,000. You are in scope.

Qualifying income includes:

  • Self employment profits (not turnover, but profit after expenses)
  • Property income (rental profits from UK or overseas properties)
  • Any other income reported on the self employment or property pages of the tax return

It does not include employment income, pension income, savings interest, or dividend income. If you are employed full time and earn £80,000 from your job but also have a small rental portfolio generating £15,000 profit, you are not in scope for April 2026 because your qualifying income is below £50,000. You are in scope for April 2027 if your qualifying income is between £30,000 and £50,000.

Who Is Excluded from MTD ITSA?

Certain groups are outside the mandate entirely:

  • Limited companies (they are already in MTD for corporation tax from 2026, but that is a separate mandate)
  • Partnerships with a partnership return (MTD for partnerships is expected later, not April 2026)
  • Trusts and estates
  • Non resident companies with UK property income
  • Individuals with qualifying income below £30,000 (voluntary only)

If you are a contractor operating through your own limited company, you are not directly affected by MTD ITSA. Your limited company files corporation tax returns under CT600, not self assessment. However, if you also have self employed income or rental income in your personal name, that side of your affairs is in scope if the income thresholds are met.

What Is the Timeline from April 2026?

The first tax year under MTD ITSA is 2026/27 (6 April 2026 to 5 April 2027). Here is the submission schedule:

  • Quarter 1: 6 April to 5 July 2026. Update due by 5 August 2026.
  • Quarter 2: 6 July to 5 October 2026. Update due by 5 November 2026.
  • Quarter 3: 6 October to 5 January 2027. Update due by 5 February 2027.
  • Quarter 4: 6 January to 5 April 2027. Update due by 5 May 2027.

After the fourth quarter update, you submit an End of Period Statement (EOPS) for each source of income (self employment and property separately). Then you submit a final declaration by 31 January 2028, which replaces the current self assessment return. The final declaration confirms the figures are correct and triggers the calculation of any balancing payment or refund.

If you already file your self assessment return well before the January deadline, you can do the same here. Submit the EOPS and final declaration earlier. There is no requirement to wait until January.

What Software Do You Need for MTD ITSA?

HMRC has published a list of MTD compatible software. You cannot use spreadsheets directly unless they are linked to bridging software that converts the data into the required digital format. Most accounting software providers already offer MTD ITSA functionality or are adding it before April 2026.

The main options include:

  • Xero: MTD ITSA ready. You record transactions in Xero as normal. The quarterly update is generated from your coded transactions.
  • FreeAgent: Built for contractors and small businesses. MTD ITSA compliant. Particularly popular with limited company directors who also have self employed income.
  • QuickBooks: MTD ITSA enabled. Works well for sole traders and landlords.
  • Sage 50 and Sage Accounting: Both have MTD ITSA functionality. Sage 50 is still common in trade and manufacturing businesses.
  • GoSimpleTax: A simpler option for sole traders with straightforward affairs.
  • Crunch software: Used by many contractors and freelancers. MTD ITSA compliant.

If you currently file your self assessment using spreadsheets or paper records, you need to move to MTD compatible software before April 2026. Do not leave this until March 2026. The onboarding process, data migration, and learning curve take time. Start in late 2025 at the latest.

What Happens If You Miss the MTD ITSA April 2026 Deadline?

HMRC has said it will take a light touch approach to penalties in the first year for those who are genuinely trying to comply. But that is not a free pass. If you do nothing, you face late filing penalties for each missed quarterly update. The penalty structure for MTD ITSA is different from the current self assessment penalty regime.

Under MTD, you receive a penalty point for each missed submission. Accumulate enough points within a set period and you receive a financial penalty. Points expire after a period of compliance. The system is designed to encourage habitual compliance, not to punish one off mistakes. But ignoring the mandate entirely will accumulate points quickly.

There is also the practical problem. If you do not submit quarterly updates, HMRC will not have your cumulative tax position. They may issue estimated assessments based on previous years. You then have to correct those estimates, which creates more work than just submitting the quarterly updates on time.

How to Prepare for MTD ITSA Now

Here is a practical checklist for anyone in scope for the April 2026 deadline:

1. Confirm Your Qualifying Income

Look at your 2024/25 tax return. Add together your self employment profit and property income. If the total exceeds £50,000, you are in scope for April 2026. If it is between £30,000 and £50,000, you are in scope for April 2027. If it is below £30,000, you are not mandated but can volunteer.

2. Choose Your MTD Compatible Software

If you already use accounting software, check with your provider whether it is MTD ITSA compliant. Most major providers are. If you use spreadsheets, you need to migrate. If you use paper records, you need to digitise. This is the single biggest change for most people.

3. Set Up Your Digital Record Keeping

From April 2026, you must keep digital records of all income and expenses. That means every invoice, receipt, and bank transaction must be recorded in your MTD software. You cannot keep paper receipts in a shoebox and type them up quarterly. The software must hold the digital record continuously.

4. Reconcile Your Bank Accounts

Most MTD software links directly to your bank feed. Set this up now. Automated bank feeds reduce manual data entry and ensure your records are always up to date. Xero, FreeAgent, and QuickBooks all offer bank feeds. Dext (formerly Receipt Bank) is a popular add on for receipt capture.

5. Review Your Tax Position Early

One benefit of MTD ITSA is that you see your cumulative tax position after each quarter. Use that information to adjust your payments on account or set aside funds for the final bill. You will not get a surprise tax bill in January because you will have seen it building all year.

What About Limited Companies and MTD?

Limited companies are not in scope for MTD ITSA. But they are in scope for MTD for corporation tax, which goes live from April 2026 for accounting periods starting on or after that date. That is a separate mandate with different rules. We cover that in detail on our corporation tax blog.

If you are a director of a limited company and also have self employed or rental income in your personal name, you need to manage both mandates. The company side uses MTD for corporation tax. Your personal side uses MTD ITSA. They are separate digital obligations but the same software can often handle both.

What If You Are a Landlord with Multiple Properties?

Landlords with significant property portfolios face the biggest administrative change under MTD ITSA. If you have 10 rental properties, each with separate income and expenses, you must record every transaction digitally. That includes mortgage interest (restricted to basic rate tax relief), repairs, letting agent fees, and all other allowable expenses.

If you currently prepare a single spreadsheet for all properties and hand it to your accountant in January, that approach stops working from April 2026. You need software that can handle multiple property income streams. FreeAgent and QuickBooks both handle property income well. Xero also works, though you may need to use tracking categories to separate properties.

For landlords with overseas property income, the same rules apply. Your overseas rental income is qualifying income. You must submit quarterly updates for it. The currency conversion rules remain the same as under current self assessment, but you must record the converted amounts in your MTD software.

Can You Volunteer for MTD ITSA Before April 2026?

Yes. HMRC opened voluntary registration for MTD ITSA from April 2024. If your qualifying income is below £50,000 and you want to move to digital quarterly reporting early, you can. Some businesses find it helpful to transition before the mandate hits, especially if they are already using MTD compatible software for VAT.

If you are already in MTD for VAT (mandatory from April 2022 for VAT registered businesses), the transition to MTD ITSA is straightforward. Your software already sends digital updates to HMRC. Adding income tax updates is an extension of the same process.

What Does This Mean for Your Accountant?

Your accountant can still prepare and submit your quarterly updates. Many clients will continue to use an accountant for the same services they currently receive. The difference is that the accountant needs access to your digital records throughout the year, not just at year end.

If you currently send your accountant a box of receipts in May and get your tax return filed in October, that workflow changes. Your accountant needs ongoing access to your MTD software to review transactions, code them correctly, and submit the quarterly updates. Some accountants charge a monthly fee for this ongoing service. Others include it in a fixed annual fee.

As ICAEW qualified accountants, we have been transitioning clients to MTD compatible workflows for several years. The clients who prepare early find the transition smooth. Those who wait until February 2026 find it stressful and expensive.

Common Questions About the MTD ITSA April 2026 Deadline

Here are the questions we hear most often from clients:

Do I need to submit quarterly updates if my income fluctuates below £50,000?

If your 2024/25 return showed qualifying income above £50,000, you are in scope for April 2026 regardless of whether your income drops in 2025/26. HMRC uses the latest completed return to determine scope. If your income falls below £50,000 in a later year, you can request to exit the mandate, but you remain in scope until HMRC agrees.

What if I have multiple self employed trades?

You submit one set of quarterly updates covering all your self employed income. You do not submit separate updates for each trade. But you submit a separate End of Period Statement for each trade at year end.

Can I use spreadsheets with bridging software?

Yes. HMRC allows spreadsheets as long as they are linked to MTD compatible bridging software that converts the data into the required digital format. This is a common approach for businesses with complex calculations that do not fit standard accounting software.

What happens to my payments on account?

Payments on account continue as normal. MTD ITSA does not change when you pay tax. You still make payments on account on 31 January and 31 July each year. The quarterly updates are for reporting, not payment.

Next Steps for Your Business

If you are in scope for the MTD ITSA April 2026 deadline, start preparing now. Confirm your qualifying income, choose your software, and set up your digital record keeping. If you are not sure whether you are in scope, check your latest tax return or speak to your accountant.

We work with businesses across the UK, from sole traders in Glasgow to property investors in Birmingham and contractors in London. If you need help preparing for MTD ITSA, contact our team. We can review your current setup, recommend software, and handle the quarterly submissions on your behalf.

For more detail on how MTD affects specific business types, see our VAT and Making Tax Digital blog or our sole trader and self employment resources.