Making Tax Digital for ITSA: Complete Guide 2026

Introduction

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the biggest change to UK tax reporting in a generation. From April 2026, self-employed individuals and landlords with gross income over £50,000 will be required to keep digital records and submit quarterly updates to HMRC using compatible software — replacing the traditional annual Self Assessment tax return.

This guide covers everything you need to know about MTD for ITSA: who it affects, what the deadlines are, how quarterly submissions work, which software you need, what penalties apply, and how to prepare before the April 2026 start date.

What Is MTD for ITSA?

MTD for ITSA is part of HMRC's wider Making Tax Digital programme, which already applies to VAT-registered businesses. The core principle is simple: instead of filing a single annual tax return, taxpayers within scope must keep digital records throughout the year and submit quarterly summaries of their income and expenses to HMRC using MTD-compatible software.

Key Changes from Self Assessment

• Digital record keeping: All business income and expenses must be recorded digitally using compatible software — paper records and standalone spreadsheets are no longer sufficient
• Quarterly updates: Four quarterly submissions per year summarising income and expenses for each period
• End of Period Statement (EOPS): An annual submission to finalise your business figures and make accounting adjustments
• Final Declaration: Replaces the traditional Self Assessment tax return — used to report all income sources, claim reliefs, and confirm your final tax position

The aim is to give taxpayers a more accurate, real-time view of their tax liability throughout the year, reducing the risk of unexpected tax bills and making it easier to budget for payments.

Who Is Affected?

MTD for ITSA applies to individuals who receive income from self-employment or property (i.e. landlords). The rollout is based on gross income thresholds:

Important: The threshold is based on gross income (turnover), not profit. If you are both self-employed and a landlord, your combined gross income from both sources determines whether you are in scope.

Who Is Not Yet Affected

• Self-employed individuals and landlords with gross income below £30,000 (no confirmed date yet)
• Partnerships (including LLPs) — expected to be brought in at a later date
• Limited companies — Corporation Tax is handled separately and is not part of MTD for ITSA
• Individuals with only PAYE employment income

MTD for ITSA Timeline

Here is the full timeline of key dates for the MTD for ITSA rollout:

Quarterly Submissions Explained

Under MTD for ITSA, the tax year (6 April to 5 April) is divided into four quarters. For each quarter, you must submit a summary of your business income and expenses to HMRC through your MTD-compatible software.

What Each Quarterly Update Contains

• Total business income received during the quarter
• Total business expenses incurred during the quarter
• Categorised by HMRC-specified income and expense types

Quarterly updates are summaries, not full accounts. You do not need to submit individual invoices or receipts — but you must keep the underlying digital records in case HMRC requests them.

Multiple Income Sources

If you have both self-employment income and property income, you will need to submit separate quarterly updates for each source. For example, a freelancer who also lets a property would submit two quarterly updates per quarter — one for their self-employment and one for their rental income.

Quarterly Submission Deadlines

The standard quarterly periods and their submission deadlines for the 2026/27 tax year are:

Each quarterly update must be submitted within one month of the end of the quarter. If a deadline falls on a weekend or bank holiday, the submission is due on the next working day.

Calendar Quarter Election

HMRC may allow some taxpayers to use calendar quarters (e.g. January to March, April to June) instead of the standard tax year quarters. This can simplify record keeping if your accounting period already follows calendar quarters. Check with your software provider or accountant to see if this option is available.

EOPS and Final Declaration

End of Period Statement (EOPS)

After the end of the tax year, you must submit an End of Period Statement for each source of business income. The EOPS allows you to:

• Make accounting adjustments (e.g. accruals, prepayments, capital allowances)
• Correct any errors in your quarterly updates
• Confirm that your business income and expense figures are accurate and complete

The EOPS deadline is 31 January following the end of the tax year — so for the 2026/27 tax year, the EOPS is due by 31 January 2028.

Final Declaration

The Final Declaration replaces the traditional Self Assessment tax return. It is where you:

• Report all income — including employment income, savings interest, dividends, and capital gains
• Claim personal allowances and tax reliefs (e.g. marriage allowance, charitable donations)
• Confirm your final tax liability for the year
• Declare that the information submitted is correct and complete

The Final Declaration is also due by 31 January 2028 for the 2026/27 tax year. Any tax owed must be paid by the same date.

Compatible Software

To comply with MTD for ITSA, you must use software that is recognised by HMRC as MTD-compatible. This software must be able to:

• Keep and maintain digital records of income and expenses
• Submit quarterly updates directly to HMRC via their API
• Submit the End of Period Statement and Final Declaration
• Receive information from HMRC (e.g. tax calculations)

Types of Compatible Software

HMRC maintains a list of MTD-compatible software on GOV.UK. Options include:

• Full accounting software: All-in-one platforms such as Xero, QuickBooks, FreeAgent, and Sage that handle record keeping, invoicing, and MTD submissions
• Bridging software: Tools that connect existing record-keeping systems (including spreadsheets) to HMRC's MTD API — though the underlying records must still be digital
• HMRC's free software: HMRC is expected to provide a basic free tool for taxpayers with simpler affairs

Choosing the Right Software

When selecting MTD-compatible software, consider:

• Whether it supports both self-employment and property income (if applicable)
• Cost — prices range from free to several hundred pounds per year
• Integration with your bank accounts for automatic transaction categorisation
• Whether your accountant or tax agent can access the software to review and submit on your behalf
• Mobile app availability for recording expenses on the go

Penalties for Non-Compliance

MTD for ITSA uses the new points-based penalty system, which is already in place for VAT. This replaces the old fixed-penalty regime with a more proportionate approach.

Late Submission Penalties

Each late quarterly update, EOPS, or Final Declaration adds 1 penalty point to your account. The penalty threshold for quarterly filers is 4 points:

Points can be reset to zero if you submit all returns on time for a continuous period of 24 months (for quarterly filers).

Late Payment Penalties

Late payment penalties apply separately to any tax owed:

• Up to 15 days late: No penalty
• 16–30 days late: 2% of the tax outstanding at day 15
• Over 30 days late: A further 2% of the tax outstanding at day 30
• After day 31: An additional daily charge at 4% per annum on the outstanding balance

Interest is also charged on all overdue amounts at the Bank of England base rate plus 2.5%.

How to Prepare

If you are within scope of MTD for ITSA from April 2026, here is a practical checklist to get ready:

Before April 2026

• Check your gross income: Review your Self Assessment return to determine whether your combined self-employment and property income exceeds £50,000
• Choose MTD-compatible software: Research and select software from HMRC's approved list — start using it before the mandatory date so you are comfortable with it
• Sign up for MTD for ITSA: Register through your Government Gateway account on GOV.UK
• Digitise your records: Move from paper-based or spreadsheet records to your chosen software
• Talk to your accountant: If you use an accountant or tax agent, discuss how MTD for ITSA will affect your working relationship and whether they will submit on your behalf
• Set up bank feeds: Connect your business bank account to your software for automatic transaction imports

Ongoing Compliance

• Record transactions regularly: Do not leave everything to the end of the quarter — categorise income and expenses as they occur
• Submit quarterly updates on time: Set calendar reminders for the 5th of August, November, February, and May
• Review before submitting: Check your quarterly figures for accuracy before each submission
• Keep supporting records: Retain invoices, receipts, and bank statements for at least 5 years
• Use deadline tracking tools: Services like TaxOnTime can generate personalised deadline calendars with reminders so you never miss a submission

Conclusion

MTD for ITSA represents a fundamental change in how self-employed individuals and landlords report their income to HMRC. The shift from a single annual tax return to quarterly digital submissions will require new habits, new software, and careful attention to deadlines.

The good news is that with the right preparation, MTD for ITSA can actually simplify your tax affairs. Real-time visibility of your income and expenses means fewer surprises at year end, and compatible software can automate much of the record-keeping burden.

Start preparing now: choose your software, digitise your records, and use our Deadline Generator to create a personalised calendar of all your MTD for ITSA submission dates — with reminders so you stay compliant from day one.