Making Tax Digital for Income Tax

Making Tax Digital (MTD) is transforming the way individuals and businesses in the UK manage their taxes. While it initially applied to VAT, the next major phase—Making Tax Digital for Income Tax Self Assessment (MTD for ITSA)—will significantly impact self-employed individuals and landlords.

If you earn income outside of PAYE, now is the time to prepare.

What Is MTD for Income Tax?

MTD for ITSA is a government initiative requiring individuals with annual business or property income over £50,000 (and later £30,000) to keep digital records and use MTD-compatible software to submit income tax updates quarterly to HMRC.

This marks a shift away from the traditional annual Self Assessment tax return and moves towards real-time tax reporting.

Who Will Be Affected?

From April 2026, MTD for ITSA will apply to:

  • Self-employed individuals

  • Landlords earning more than £50,000 per year

From April 2027, it will extend to those earning over £30,000 annually.

General partnerships and those earning under the threshold will not be affected immediately.

Key Requirements Under MTD for ITSA

If you fall within the criteria, you will be required to:

  1. Keep digital records of your income and expenses.
  2. Use HMRC-approved MTD software to manage your taxes.
  3. Submit quarterly updates to HMRC (every 3 months).
  4. Submit an End of Period Statement (EOPS) at the end of the tax year.
  5. Submit a Final Declaration, replacing the current Self Assessment tax return.

Timeline & Deadlines

  • April 2026: MTD for ITSA becomes mandatory for individuals with income over £50,000.

  • April 2027: Threshold lowers to £30,000.

  • Updates must be submitted quarterly, in line with your accounting periods.

Benefits of MTD for Income Tax

  • More accurate tax reporting

  • Real-time tax estimates

  • Improved record keeping

  • Less risk of late penalties

  • Easier financial management

How to Get Ready

To prepare for MTD for ITSA, consider the following steps:

  • Review your income sources – Will your total business/property income exceed the threshold?

  • Choose MTD-compatible software – There are many HMRC-recognised solutions available.

  • Start keeping digital records now – The earlier you begin, the easier the transition.

  • Speak to your accountant – A professional can help you choose the right tools and understand your obligations.

How Front Edge Accountants Can Help

At Front Edge Accountants, we help self-employed individuals and landlords prepare for MTD with:

  • Personalised guidance on MTD rules
  • Setup and integration of MTD-compatible software
  • Ongoing support with digital recordkeeping
  • Quarterly submission management and compliance monitoring

Need Help Making the Transition?

Don’t wait until the last minute. MTD for Income Tax will become a legal requirement—and early preparation will save you stress, time, and potential penalties.

Contact Front Edge Accountants today for expert support and a smooth transition into digital tax.