Making Tax Digital
for Income Tax:
Live from April 2026
MTD for ITSA is mandatory now for sole traders and landlords earning over £50,000. Protax Consultants, based in Wimbledon, onboards you onto compliant software and manages all four quarterly submissions plus your final declaration on a fixed monthly fee.
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The Biggest Change to UK Tax Reporting in 30 Years
MTD for Income Tax replaces the annual Self Assessment tax return for eligible individuals. The amount of tax you owe does not change. Only how often and how you report it to HMRC changes.
Around 780,000 sole traders and landlords are affected in Phase 1. If you have not already enrolled through your accountant, you need to act now. HMRC has already written to those in scope.
Check If You Are in Scope →Keep digital records all year
Income and expenses must be recorded digitally throughout the tax year using HMRC-compatible software, not just at year-end.
Submit four quarterly updates to HMRC
Cumulative income and expense totals are submitted to HMRC every quarter via your software's direct API link.
Submit a final year-end declaration
After the tax year ends, a final declaration confirms all income including dividends, employment, and savings. Due by 31 January, it replaces your Self Assessment return.
Pay tax on the same schedule as before
The 31 January payment deadline does not change. Payments on account (31 January and 31 July) also remain as they are.
Who Must Comply with MTD for ITSA and When
MTD for ITSA is being rolled out in phases based on gross income from self-employment and property combined, before expenses, allowances, or tax deductions.
| Phase | Start Date | Income Threshold | Who Is Affected |
|---|---|---|---|
| Phase 1: Live Now | 6 April 2026 | Over £50,000 | Sole traders and landlords with combined gross income above £50,000 on their 2024/25 tax return |
| Phase 2 | 6 April 2027 | Over £30,000 | Sole traders and landlords with combined gross income of £30,000–£50,000 |
| Phase 3 | 6 April 2028 | Over £20,000 | Sole traders and landlords earning above £20,000 |
| Partnerships | TBC | TBC | Partnerships, date not yet confirmed by HMRC |
How eligibility is determined: HMRC bases Phase 1 eligibility on your 2024/25 Self Assessment return (submitted by 31 January 2026). If your combined self-employment and property income exceeded £50,000 on that return, you are mandated from 6 April 2026 regardless of your current-year income.
Limited companies are not affected. MTD for Income Tax applies only to individuals with self-employment or property income. Corporation Tax has a separate MTD consultation underway and does not affect your company at this stage.
Your MTD for ITSA Quarterly Deadlines
Under the default tax year quarters, your first submission is due 7 August 2026. If you prefer calendar quarters aligned to your VAT return dates, you can elect to use those instead.
Quarter 1
6 Apr – 5 Jul 2026
Period covered
7 Aug 2026
Deadline
Quarter 2
6 Jul – 5 Oct 2026
Period covered
7 Nov 2026
Deadline
Quarter 3
6 Oct – 5 Jan 2027
Period covered
7 Feb 2027
Deadline
Quarter 4
6 Jan – 5 Apr 2027
Period covered
7 May 2027
Deadline
Final Declaration
Full tax year
All income confirmed
31 Jan 2028
Deadline
What You Risk for Non-Compliance
MTD for ITSA introduces a new points-based penalty system separate from the existing Self Assessment regime. The soft landing in 2026/27 ends and penalties apply in full from April 2027.
Late Submission Penalties
Late Payment Penalties
What Software Do You Need?
HMRC does not approve specific products but publishes a list of recognised compatible tools. Using software not on this list risks your submissions being rejected. We set up, configure, and manage your software as part of our service.
Xero: Primary Recommendation
Full MTD for ITSA support with bank feeds, expense categorisation, and direct quarterly filing. Our first recommendation for most clients making the switch.
QuickBooks & FreeAgent
Strong MTD for ITSA features. QuickBooks suits self-employed clients already on the platform. FreeAgent is ideal for sole traders and freelancers wanting simplicity.
Bridging Software & Sage
Still using spreadsheets? Bridging software creates the required digital link to HMRC without changing your workflow. Sage is available for existing users.
We set up your software, connect it to your bank accounts, and train you on the minimal input required. Once it is running, most clients spend less than 30 minutes per quarter on MTD compliance.
What You Must Record Under MTD for ITSA
Quarterly updates are cumulative. Each one builds on the last. You do not need to categorise every individual transaction in detail if your combined income is under £90,000.
Gross income per business
Total turnover or gross rental income from each separate trade or property business you run, reported per source, not combined.
Total allowable expenses
If combined income is under £90,000, consolidated expense totals are accepted with no need to itemise every category. Over £90,000 requires a full breakdown.
Cumulative figures each quarter
Each update covers the year to date, not just the quarter. Your Q2 update includes Q1 + Q2 combined, and so on. This reduces the risk of errors compounding.
Final declaration: all other income
The year-end declaration adds dividends, employment income, savings interest, and any other sources not reported quarterly. Due by 31 January.
MTD for ITSA: What Changes for Landlords
If your gross rental income exceeded £50,000 in 2024/25, whether from one property or several combined, you are in Phase 1 of MTD for ITSA from 6 April 2026.
If you also have self-employment income, the two streams are reported separately but your combined gross income determines whether you are in scope. Landlords with rental and employment income only report the property income through MTD. PAYE income is handled separately. See our landlord tax service for the full picture.
See Our Landlord Tax Service →Separate update per property business
You submit individual quarterly updates for each trade or property business. If you have both a sole trade and a rental portfolio, that is two separate quarterly submissions.
Employment income not included quarterly
PAYE employment income continues to be handled through your employer's payroll. It is only declared at the year-end final declaration stage.
Section 24 and allowable expenses still apply
All existing landlord tax rules, including Section 24 mortgage interest restrictions, repair and maintenance deductions and letting agent fees, continue under MTD. Nothing changes in what you can claim.
CGT and disposals reported at year-end
Capital gains from property sales are not part of quarterly updates. They are included in the final year-end declaration as before.
MTD for Income Tax vs MTD for VAT
These are two entirely separate HMRC obligations. Many of our clients are subject to both: VAT-registered sole traders or landlords who also exceed the MTD for ITSA threshold. We manage both within one service package.
| MTD for VAT | MTD for Income Tax (ITSA) | |
|---|---|---|
| Who it applies to | All VAT-registered businesses | Sole traders and landlords above income threshold |
| When it started | April 2019 (extended April 2022) | April 2026, Phase 1 now live |
| Reporting frequency | Quarterly VAT returns | 4 quarterly updates + 1 final declaration |
| What is reported | Output VAT, input VAT, boxes 1–9 | Income and expenses per trade or property |
| Tax payment timing | With each VAT return | Unchanged, still 31 January |
| Software required | MTD-compatible VAT software | MTD-compatible Income Tax software |
| Penalties | Points-based since January 2023 | Points-based from April 2027 (soft landing 2026/27) |
Also subject to VAT? See our dedicated VAT Returns & MTD for VAT service page.
Wimbledon, South West London & UK-Wide
Our office is at Lombard Business Park, Wimbledon, SW19 3TZ. If you are searching for an MTD for ITSA accountant near me in South West London, we provide face-to-face onboarding and consultations that most online-only MTD services cannot match.
Our Office, SW19
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Frequently Asked Questions
About MTD for Income Tax
April 2026 Is Here: Get Your MTD Compliance Sorted Today
If you are in scope and not yet enrolled, you are already late. If you are enrolled but uncertain whether your software is configured correctly, a review now prevents penalties later. We onboard new clients within one week.
- Free MTD compliance assessment, no obligation
- Software setup and bank feed configuration included
- All 4 quarterly submissions managed for you
- Final declaration prepared and filed
- ACCA-certified, HMRC authorised agent
- Fixed monthly fee, no surprises
Also need VAT return help? See our MTD for VAT service.
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