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Making Tax Digital for Income Tax Self Assessment (MTD ITSA): A Complete Guide for UK Sole Traders and Landlords
July 11, 2025
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is a landmark initiative by HM Revenue and Customs (HMRC) that will transform how sole traders and landlords in the UK manage and report their tax affairs. This reform introduces mandatory digital record-keeping and quarterly submissions using HMRC-compatible MTD ITSA software for landlords and sole traders.
Whether you are a self-employed professional in London, a property landlord in Birmingham or Bromley, or running a small business in Manchester, Leicester, or Sutton, understanding how this reform impacts your compliance obligations is crucial. The right MTD ITSA solutions for self-employed individuals can simplify the process.
What is MTD ITSA?
MTD ITSA is the next phase of the Making Tax Digital strategy, scheduled to begin from 6 April 2026. It requires eligible individuals to:
- Maintain digital records
- Submit quarterly updates via HMRC-approved MTD ITSA software
- File an End of Period Statement and Final Declaration annually
This replaces the traditional Self Assessment process for qualifying taxpayers. If your income meets the threshold, you must use compatible software for compliance.
Who Needs to Comply with MTD ITSA?
Implementation Date | Who Is Affected | MTD ITSA Threshold 2026 |
6 April 2026 | Sole traders and landlords | Over £50,000 total annual income |
6 April 2027 | Sole traders and landlords | £30,000 - £50,000 total annual income |
If your income from self-employment or property exceeds the threshold, you will receive a notification from HMRC based on your 2024–2025 Self Assessment return.
How MTD ITSA Changes the Self Assessment Process
You must submit income and expenses every three months on these dates:
- 7 May
- 7 August
- 7 November
- 7 February
At the end of the tax year, submit a final declaration by 31 January. This replaces your annual Self Assessment.
Additional requirements:
- File an End of Period Statement after the tax year ends
- Submit a Final Declaration by 31 January
Digital Record-Keeping Becomes Mandatory
- All records must be kept electronically
- Submissions must be made through HMRC-recognised MTD ITSA software for sole traders and landlords
- Paper records and manual uploads will no longer be accepted
Penalties for Non-Compliance
HMRC will implement a points-based penalty system to encourage timely submission of quarterly updates. Each missed deadline results in one penalty point, and a financial penalty is applied when you reach four points for quarterly submissions.
- £200 fine after four late submissions
- Additional fines for failing to use compatible software
- Risk of missed tax deductions and inaccurate assessments
Why is HMRC Implementing MTD ITSA?
Making Tax Digital for Income Tax Self Assessment aims to:
- Improve accuracy by minimising manual errors
- Encourage timely reporting through quarterly submissions
- Increase transparency for businesses and landlords
- Boost efficiency through digitisation and automation
This is especially important for small businesses and landlords, where delayed or incorrect reporting can result in penalties.
How to Prepare for MTD ITSA 2026
Early preparation is essential for a smooth transition and ongoing compliance. Follow these steps:
Calculate Total Income Accurately
Determine your total income from self-employment and property before deducting expenses to see if you fall within the MTD ITSA threshold 2026.
Check Your Eligibility
Use HMRC’s online eligibility checker or contact our expert team for a personalised review.
Select MTD-Compatible Software
Choose approved accounting software that supports MTD ITSA submissions. Popular options include:
- QuickBooks
- Xero
- FreeAgent
- Hammock (particularly useful for landlords)
How to choose MTD ITSA software for landlords UK?
Our tax return accountant can help you select and configure the best fit.
Contact us today: 📞 Call 020-8239-4999 Or 📧 Email dhruv@doshiaccountants.co.uk
Begin Digital Record-Keeping Immediately
Start now to reduce pressure during rollout and ensure data is ready for quarterly updates.
Register with HMRC for MTD ITSA
We can manage your registration with HMRC for accuracy and efficiency.
Understand and Monitor All Deadlines
Set up automated reminders or appoint a tax expert to manage and submit your quarterly updates in line with HMRC requirements.
Best HMRC-Approved MTD ITSA Software Options
Software | Suitable For | Key Benefits |
|---|---|---|
| QuickBooks | Small businesses | Bank feeds, simple dashboard, HMRC-ready |
| Xero | Growing firms | Scalable, cloud-based, strong integration features |
| FreeAgent | Freelancers and Sole Traders | Free with some UK banks, strong UK support |
| Hammock | Landlords | Property finance management, MTD-compliant rental tracking |
Our self assessment specialists can recommend, configure, and train you on the best MTD ITSA software for landlords and sole traders to suit your business or property management needs.
MTD ITSA Frequently Asked Questions
1. What is the difference between MTD ITSA and traditional Self Assessment?
MTD ITSA requires quarterly updates using compatible digital software. Traditional Self Assessment involved a single annual tax return through HMRC’s online or paper system.
2. Is MTD ITSA compulsory for all sole traders?
No, MTD ITSA is only mandatory for individuals with total annual income from self-employment or property over £30,000. Those below the threshold can continue using the standard Self Assessment process, unless they voluntarily join.
3. Can I use spreadsheets to submit my tax data?
Yes, but only if connected to HMRC-recognised bridging software that can convert and transmit data digitally.
4. Are payment dates changing under MTD ITSA?
No, payment dates remain the same:
• 31 January – Final balancing payment for the tax year
• 31 January and 31 July – Payments on account, if applicable
5. What happens if I fail to comply with MTD ITSA?
Non-compliance may result in financial penalties, missed tax-saving opportunities, inaccurate records, and increased deadline pressure.
6. Is there specific guidance for landlords under MTD ITSA?
Yes, landlords earning more than £30,000 annually must comply. This includes maintaining digital records and submitting quarterly updates through compatible software. Our team can help you transition smoothly.
Self Assessment for Landlords: What to Know Under MTD ITSA
If you own rental properties:
- MTD ITSA applies if your rental income exceeds the threshold
- You must use property-focused MTD ITSA software for landlords (e.g., Hammock)
- Quarterly updates must reflect gross rental income and allowable expenses
- Consult with our self assessment tax accountant to ensure accurate categorisation and maximise deductions
We offer tailored support for Self Assessment for landlords, including software setup and expense tracking.
Local Support for MTD ITSA Across the United Kingdom
Doshi Accountants provides personalised MTD ITSA support in:
- Croydon
- London
- Manchester
- Birmingham
- Bristol
- Bromley
- Leicester
- Sutton
- Other locations across the UK
Our services include:
- One-to-one consultations
- MTD software setup and configuration
- Digital bookkeeping support
- Quarterly tax submission services
- Year-round compliance and tax planning advice
Take Action Now: Avoid Penalties and Save Time
Getting started with MTD ITSA does not have to be complicated. Our expert advisors can help you:
- Understand your obligations
- Select the right HMRC-compatible MTD ITSA software
- Set up digital records and submissions
- Manage Self Assessment for landlords or sole traders
- Reduce errors and avoid penalties
Book your consultation today and receive a personalised MTD compliance plan:
📞 Call 020-8239-4999 Or 📧 Email dhruv@doshiaccountants.co.uk
Making Tax Digital for Income Tax Self Assessment is more than a regulatory shift-it is a chance to modernise your finances. Whether you are a landlord, freelancer, or self-employed professional, getting ahead of this change will save you time, reduce tax stress, and ensure HMRC compliance. Contact Doshi Accountants now to secure your digital tax transition with expert guidance and software solutions built for success.