As part of its ongoing efforts to modernise the UK tax system, HM Revenue & Customs (HMRC) is rolling out Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA). This initiative aims to streamline tax reporting, reduce errors, and encourage the use of digital record-keeping.
What’s Changing?
Currently, self-employed individuals and landlords file their Self-Assessment tax returns annually. Under MTD for ITSA, from April 2026, those affected will need to:
Keep digital records of income and expenses.
Submit quarterly updates to HMRC via MTD-compatible software.
Complete an End of Period Statement (EOPS) and a Final Declaration each year.
How Making Tax Digital for ITSA Will Affect You?
MTD for ITSA will be phased in over time:
From April 2026: Self-employed individuals and landlords earning over £50,000 annually must comply.
From April 2027: The threshold will be lowered to £30,000.
HMRC will determine who needs to comply based on their 2023-24 Self-Assessment tax returns and will start sending out notification letters from April 2025.
How to Prepare
To ensure a smooth transition, consider taking these key steps:
1. Check if You’re Affected
Review your income levels to determine whether you’ll need to comply with MTD from April 2026 or April 2027.
2. Choose the Right Software
MTD requires the use of compatible accounting software. Research options that best suit your business and integrate them into your workflow before the deadline.
3. Plan Your Enrolment
Early Adoption (2025-26 tax year): Voluntarily signing up early allows extra time to get used to the system and access HMRC’s support services.
Standard Enrolment (2026-27 tax year): If you prefer, you can wait until it becomes mandatory in April 2026.
4. Check for Exemptions
Some individuals may be eligible for an exemption, such as those who cannot use digital tools due to age, disability, or location. If you believe you might qualify, seek professional advice.
How Daykin Scott Accountants Can Help
We understand that transitioning to MTD can seem overwhelming, but with the right support, it can be a smooth process. At Daykin Scott Accountants, we offer:
✅ Digital record-keeping setup – Helping you get started with MTD-compliant systems.
✅ Software selection & integration – Guiding you in choosing the best accounting software for your business.
✅ Ongoing support – Assisting with quarterly reporting and annual declarations to keep you compliant.
By preparing early, you can avoid last-minute stress and ensure you’re ready for MTD when it becomes mandatory. If you need expert guidance, get in touch with us today – we’re here to help!
