Making Tax Digital for Income Tax Self Assessment (MTD for ITSA)
Making Tax Digital for Landlords, Sole Traders and Partnerships
MTD for ITSA will change the way sole traders and landlords report their income to HMRC and will replace the annual Self Assessment Tax Return.
What is MTD for ITSA?
MTD for ITSA is being introduced from April 2026 and affects sole traders or landlords whereby they will need to keep digital records and use MTD compatible software to manage, track and send updates to HMRC, as follows:
- Sole traders or landlords with an income of more than £50,000 will need to comply with MTD for ITSA from April 2026.
- Sole traders or landlords with an income of more than £30,000 will need to comply with MTD for ITSA from April 2027.
- Partnerships will be required to join MTD for ITSA at a later date.
Why is MTD for ITSA Being Introduced?
The Government’s initiative is intended to create a digital tax reporting system to help businesses and individuals to keep on top of their tax affairs and reduce errors in reporting.
Sole traders or landlords will be required to submit information to HMRC using MTD-compatible software on a quarterly basis.
Which MTD-Compatible Software Should I Use?
You are required to use software that is recognised by HMRC which can create and store digital records of your transactions.
Choosing a MTD-compatible cloud accounting system will provide you with the tools you need to keep digital records, along with additional features such as bank reconciliation, invoice generation, sending quotes, bookkeeping, managing inventory, purchases and more.
A cloud accounting system will also make it easier to keep on top of your tax obligations – you can share access with your Accountant in real time making it simpler to transfer data.
As Xero Gold Partners, we are well equipped to advise you on the best cloud accounting solution for MTD.
Please contact Mark Tooby, Outsourcing Manager, for more information on 0161 761 5231.
What Records Do I Need to Keep?
Under the new rules, you are required to keep digital records of your income and expenses relating to your business. We recommend that you start keeping digital records as soon as possible so that you have time to prepare for the changes.
You will be required to submit quarterly updates to HMRC, together with an End of Period Statement (EOPS). If you own multiple businesses or properties, you will need to submit an EOPS for each one.
Also, you will be required to send a Final Declaration to HMRC which details all your income for the tax year and any additional information, by 31 January. The Final Declaration will replace the Self Assessment Tax Return.
How We Can Help
Our MTD for ITSA experts can advise you on the best cloud accounting system to use so that you are compliant with the new rules. We offer a basic package which includes software and quarterly submissions starting from £50 + VAT per month.
Alternatively, you can request a call back by using the form below.
Speak to our expert
If you need a specific advisory service, or want to know more about how we deliver, we recommend talking to one of our team about your circumstances and business needs.