Making Tax Digital for Income Tax (MTD for ITSA) Explained

Making Tax Digital for Income Tax (MTD for ITSA) changes how self-employed people and landlords report to HMRC. Instead of one Self Assessment return a year, those in scope must keep digital records and send HMRC quarterly updates through compatible software. It is being introduced by income level: from April 2026 for those with qualifying income over 50,000 pounds, from April 2027 for over 30,000 pounds, and from April 2028 for over 20,000 pounds.

MTD for ITSA is one of the biggest changes to personal tax administration in years. It does not change how much tax you pay, but it changes the record-keeping and the reporting rhythm, and getting ready before your start date is what avoids a scramble.

Who does Making Tax Digital for Income Tax apply to?

It applies to sole traders and landlords whose qualifying income, meaning gross self-employment and property income before expenses, is above the threshold for the relevant phase. Employment income taxed under PAYE, pensions, savings and dividends do not count towards the qualifying income figure. If your qualifying income is below the current thresholds, you are not yet in scope.

When does MTD for Income Tax start?

It is phased by income. From 6 April 2026 it applies to those with qualifying income over 50,000 pounds; from 6 April 2027 to those over 30,000 pounds; and from April 2028, under current plans, to those over 20,000 pounds. HMRC uses your most recent Self Assessment return to decide whether you are caught, so the income that brings you in is from an earlier year than the start date.

What do you have to do under MTD?

You must keep your business and property records digitally in compatible software, send HMRC a quarterly update of income and expenses for each source, and finalise the year with a final declaration that replaces the old Self Assessment return. In practice that means four updates plus a year-end submission, rather than a single annual return.

How should I prepare?

Check whether and when you are in scope based on your qualifying income, move your record-keeping onto MTD-compatible software in good time, and speak to your accountant about how the quarterly cycle will work for your business. Being set up before the start date, rather than at it, is the difference between a smooth transition and a rushed one.

Where tax investigation cover fits

More frequent digital reporting means more points at which HMRC can query a figure. Tax investigation insurance covers the professional fees of dealing with an HMRC enquiry, however it arises. See our guide to tax investigation insurance, or if you are an accountant, our accountants’ scheme.