The UK government is transforming the tax system with Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), a significant change that will impact self-employed individuals, landlords, and businesses. This initiative aims to modernise tax administration, making it more efficient, transparent, and accessible.
If you are self-employed or earn income through property rental, understanding these new requirements is essential to remain compliant and avoid penalties.
What Is Making Tax Digital for Income Tax?
MTD for ITSA is a government initiative requiring individuals with business or property income over £50,000 to maintain digital records and submit tax updates online. Instead of submitting a single annual Self Assessment tax return, affected taxpayers will need to send quarterly updates to HMRC, followed by a final year-end declaration.
Who Needs to Comply?
From April 2026, MTD for ITSA will apply to:
- Self-employed individuals with annual business income above £50,000
- Landlords earning over £50,000 per year from rental properties
- Individuals with a combination of self-employment and rental income exceeding the threshold
By April 2027, the scheme will extend to those earning over £30,000.
How Does It Work?
Under MTD for ITSA, taxpayers must:
- Use HMRC-approved accounting software to maintain digital records of income and expenses.
- Submit quarterly updates summarising their earnings and expenses.
- Submit an End of Period Statement (EOPS) at the end of the tax year to make final adjustments.
- Submit a final declaration, confirming total income and tax due.
Benefits of MTD for ITSA
The new system offers several advantages:
- Improved accuracy – Digital records reduce the risk of manual errors.
- Real-time tax estimates – Quarterly submissions provide an ongoing view of tax liabilities.
- Simplified tax management – Keeping digital records makes it easier to track income and expenses.
- Fewer surprises – Taxpayers can plan ahead and avoid unexpected tax bills.
How to Prepare for MTD for ITSA
To stay compliant and avoid penalties, take the following steps:
- Assess your eligibility – Determine if your income exceeds the threshold.
- Choose the right accounting software – Ensure it is HMRC-compatible.
- Get professional support – Work with an accountant to navigate the transition smoothly.
- Keep detailed digital records – Accurate record-keeping is key to compliance.
How Lucas Prestige Accountants Can Help
Navigating these changes can be complex, but you don’t have to do it alone. At Lucas Prestige Accountants, we provide expert guidance on Making Tax Digital, helping self-employed individuals and landlords transition seamlessly.
Our team can assist with:
- Selecting and setting up HMRC-approved software
- Ensuring accurate digital record-keeping
- Submitting quarterly updates and year-end declarations
- Offering ongoing tax planning advice to keep you ahead of changes
Get Ready for MTD Today
The deadline for compliance is approaching. If you need support in preparing for Making Tax Digital for Income Tax, contact us today for tailored advice.
📞 0161 398 0750
📧 info@lucasprestigeaccountants.com
🌍 www.lucasprestigeaccountants.co.uk
Ensure your tax affairs are in order and stay compliant with confidence.
