Making Tax Digital for Income Tax (ITSA) - make time to prepare


By Dan Cozens, Accounting Manager

Although sole traders and landlords now have a further two years before they will be required to keep digital records and report these to HMRC, it may help further down the line if they start to prepare and familiarise themselves with the new process.  

HMRC announced in December that Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) would be delayed for two years, from 6 April 2024 to 6 April 2026, to ease the pressure on businesses facing a challenging economic environment. The income thresholds for compliance have also been revised.

Before the announcement, MTD for ITSA was due to be compulsory from April 2024 for individuals with income over £10,000 from self-employment and property, and from April 2025 for partnerships.

New compliance dates and income thresholds

Now, from 6 April 2026, it will be compulsory for sole traders and landlords with income over £50,000 to meet MTD for ITSA requirements.

From 6 April 2027, it will then become compulsory for sole traders and landlords with income over £30,000.

HMRC is still to confirm when those with income below £30,000 and partnerships will need to comply.

What is MTD for ITSA?

Those required must keep a digital record of their income and expenses and submit a quarterly report to HMRC using MTD-compatible software. At the end of each tax year, any non-business income can be added and the return finalised. This will replace the yearly Self-Assessment tax return.

What does it mean for you?

For VAT-registered businesses that already submit MTD VAT returns, the additional quarterly reporting will be able to be done through their accounting software. For non-VAT registered businesses who still manually process their accounting records a move onto accounting software will be required and it will be beneficial to migrate to digital reporting before it becomes mandatory to avoid penalties.

Irrespective of the delay it is never too soon to update your accounting process by moving onto accounting software. There are further benefits which include cash flow forecasting, pre-year-end tax planning, better monitoring and chasing creditors.

If you would like more information about MTD for ITSA and how to implement this process please contact or call 07772812274.

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