Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is coming—and it’s going to impact millions of landlords and sole traders across the UK. With the first phase launching in April 2026, now is the time to understand how the rules apply to you and how to prepare.
We’ve put together a helpful Q&A to cover the most common questions we’re hearing from clients.
Who will be affected by MTD for ITSA, and when?
Individuals with self employment and/or income from property will need to comply with MTD for ITSA once they are mandated. The commencement date for MTD for ITSA is 6 April 2026, but a phasing-in program will mean that some individuals are not immediately within the regime. MTD for ITSA applies from:
- 6 April 2026 for sole traders and landlords with qualifying income over £50,000 in 2024/25.
- 6 April 2027 for those with qualifying income over £30,000 in 2025/26.
- 6 April 2028 for those with qualifying income over £20,000 in 2026/27.
If an individual’s qualifying income exceeds the threshold in a tax year, HMRC will notify them that they are mandated to comply with the MTD for ITSA rules.
What counts as ‘qualifying income’?
Qualifying income is your gross turnover from self-employment and property, before deducting any expenses.
If you include VAT in your income figures (e.g. under the Cash Basis), HMRC will count that toward your threshold—so it’s better to submit VAT-exclusive figures where possible.
What if I only have a small number of transactions?
Unfortunately, the number of transactions doesn’t matter. If your total qualifying income exceeds the threshold, you’re required to comply—no exceptions based on volume.
What do I need to do if I am mandated?
You’ll need to:
- Keep digital records using MTD-compatible software
- Submit quarterly updates to HMRC showing your income and expenses
- Submit an end-of-year return using the same software, including any other sources of income (like employment, dividends, etc.)
MTD doesn’t change how much tax you pay, but it changes how and when you report your income.
Will I need to make quarterly payments to HMRC?
No. MTD requires quarterly updates, not payments. Payment deadlines will stay the same:
- 31 January (for balancing payments and first payment on account)
- 31 July (second payment on account, if due)
I heard there’s an easement for businesses under £90,000 — what is it?
Yes. If your total turnover is below the VAT threshold (£90,000), you can submit simplified quarterly updates—just one total for income and one for expenses. But:
- You still need to digitally record each transaction
- You can’t just upload totals—you must enter individual items into your software, but you can categorise them simply as “income” or “expense”
What about jointly owned property?
There’s a second easement for jointly owned property, which can be used alongside the one above (if income is under £90,000). With both easements:
- You can report a single quarterly income figure
- And submit one total expense figure in the final quarter
However, any residential property finance costs (like mortgage interest) must still be reported separately.
I already submit VAT returns — how does this work alongside MTD for ITSA?
MTD for Income Tax and VAT are separate. MTD for ITSA quarters end on:
- 5 July, 5 October, 5 January, and 5 April
- OR you can choose calendar quarters: 30 June, 30 September, 31 December, and 31 March
If your VAT return dates don’t align, it might be worth changing your VAT stagger to make life easier.
What will happen if I don’t comply with the new rules?
There will be penalties for late filing, errors, and failing to keep digital records. A new points-based penalty system will apply, and HMRC will be able to charge fines of up to £3,000 per quarter for failure to maintain digital records.
It’s important to take this seriously—even if payments aren’t changing, the compliance burden is.
How can Knowles Warwick help?
At Knowles Warwick, we’re already working with clients to make sure they’re ready. We can help you:
- Choose and set up the right MTD-compatible software
- Record and submit your quarterly updates
- Manage your end-of-year filings
- Understand the thresholds and make use of any easements available
- Review your income now to estimate when you’ll be mandated
Don’t wait until 2026 — start preparing now.
MTD for Income Tax will change how many individuals interact with HMRC. The sooner you get familiar with digital recordkeeping, the smoother your transition will be.
Need help getting started with MTD for ITSA?
Get in touch with the Knowles Warwick team today and let’s make the move to digital tax easy. Be sure to follow us on LinkedIn, Instagram and Facebook for daily business and tax updates!
