The days of stressful annual self-assessment tax returns are numbered.
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is coming, and it represents the greatest change to the tax system in a generation.
If you’re a landlord or self-employed, this will transform how you handle your tax affairs from April 2026.
While HMRC has been promising a digital tax system for years – with numerous delays and false starts – the implementation dates are now firmly set.
Many businesses have already adapted to MTD for VAT, but MTD for ITSA will affect a much broader range of taxpayers.
Let’s break down what’s changing, when it’s happening, and what you’ll need to do to prepare.
Who Will Be Affected and When?
The rollout of MTD for ITSA is happening in phases based on income thresholds:
- From April 2026: If your property or self-employment income exceeds £50,000 per year
- From April 2027: If your property or self-employment income exceeds £30,000 per year
- By 2029: If your property or self-employment income exceeds £20,000 per year
These thresholds refer to your gross income (total income before expenses), not your profit. So if you’re a landlord collecting £60,000 in rent but making only £20,000 profit after expenses, you’ll still fall into the first phase in 2026.
It’s also worth noting that these thresholds apply to the combined total of all your self-employment and property income.
If you earn £30,000 from self-employment and £25,000 from property rentals, you’d hit the £50,000 threshold for the first phase.
What’s Changing Exactly?
MTD for ITSA introduces three major changes to how you’ll manage your tax affairs:
1. Digital Record Keeping
You’ll need to keep digital records of all your income and expenses using compatible software. This means spreadsheets and paper receipts won’t cut it anymore (unless they’re integrated with MTD-compatible software).
For landlords, you’ll need to digitally record:
- All rental income received
- Allowable expenses (repairs, insurance, agent fees, etc.)
- Property details and acquisition information
For the self-employed, you’ll need to track:
- All business income
- Business expenses by category
- Assets and liabilities
Self-assessment taxpayers should be doing this already, but it will now need to be continuous throughout the year. Everything will need to be logged as soon as possible so it can flow into HMRC’s systems for quarterly reports.
2. Quarterly Updates
Instead of one annual tax return, you’ll need to submit quarterly updates to HMRC through your software. All major accounting software – Xero, Sage, Quickbooks – is compliant already.
Your quarterly updates will show a summary of your income and expenses for each three-month period.
The deadlines will be:
- 7 August (for April to June quarter)
- 7 November (for July to September quarter)
- 7 February (for October to December quarter)
- 7 May (for January to March quarter)
These updates won’t calculate your tax liability – they’re simply providing HMRC with a progress report on your financial position throughout the year.
3. Final Declaration
After the end of the tax year, you’ll submit a final declaration. This replaces the current Self Assessment tax return and finalises your tax position for the year.
You’ll have until 31 January of the following tax year to submit this and pay any tax due – just as you do now.
The final declaration allows you to make any adjustments needed, claim reliefs, and report any other income, such as dividends or interest.
Real-World Impact: How This Will Change Your Life
If you’re used to the current Self Assessment system, MTD will require some important adjustments:
More Regular Engagement
Rather than the annual tax return panic in January, you’ll need to keep on top of your financial records consistently throughout the year. For many, this means a more disciplined approach to bookkeeping.
Take Sarah, a landlord with three rental properties. Currently, she gathers all her receipts and bank statements in January and spends a weekend pulling together her tax return.
Under MTD, she’ll need to update her digital records regularly and submit quarterly updates.
This new process will probably benefit many, mainly because the current self-assessment process – which results in rushing, mistakes, and stress – doesn’t benefit anyone.
Software Requirements
To participate, you’ll need compatible software that can:
- Maintain digital records
- Generate and submit quarterly updates
- Prepare and submit the final declaration
This means either:
- Dedicated accounting software with MTD functionality (Xero, Sage, Quickbooks, etc.)
- Bridging software that works with existing spreadsheets
- Specialist property management software for landlords (Landlord Studio, Freeagent)
Changed Relationship with Your Accountant
If you use an accountant, their role will transform under MTD.
Rather than the annual January rush, you’ll work together throughout the year on your quarterly submissions.
Most accountancy firms will offer basic quarterly or yearly review services, but at Double Point, we’ll go further.
We can provide monthly reconciliation checks to catch issues early, ongoing software support, and proactive tax planning opportunities that emerge from having more regular insight into your finances.
Our chartered accountants will ensure you have consistent support, making the transition to MTD not just painless but actually beneficial for your financial planning.
Start a consultation about MTD for ITSA.
Getting Ready: Your MTD Preparation Checklist
So what do you need to do to get ready for MTD for ITSA?
With implementation less than a year away for those in the first income bracket, preparation should start now:
| What’s Changing? | How It Affects You |
| Who Must Comply? | If you’re self-employed or a landlord and earn over £50,000, you must join MTD from April 2026. If you earn over £30,000, this applies from April 2027. |
| What Do You Need to Do? | Keep digital records of your income and expenses and submit quarterly tax updates to HMRC instead of a yearly tax return. |
| What Counts as Qualifying Income? | This includes self-employment income and both UK and foreign property income. Other forms of income (like pensions or employment) are not included in this threshold. |
| When Do You Submit Tax Info? | Instead of one annual tax return, you’ll submit four quarterly updates plus a final declaration at the end of the tax year. |
| What Software Do You Need? | You must use HMRC-approved software to maintain records and submit tax updates. A spreadsheet alone won’t be enough – you’ll need compatible software that connects to HMRC. |
| Can You Join Early? | Yes! If you want to get used to the system early, you can sign up voluntarily before it becomes mandatory. |
| Are There Any Exemptions? | Some exemptions apply automatically, such as if you can’t use digital tools due to age, disability, or religious beliefs. If you think you qualify, you’ll need to apply to HMRC for an exemption. |
| What Happens If You Don’t Comply? | There will be penalties for late submissions and payments under a new points-based system. Avoid fines by staying on top of your tax updates. |
The Silver Lining: Potential Benefits
While the transition to MTD might seem like a daunting prospect, there are some important potential upsides:
- Better financial visibility: Regular updates mean better awareness of your tax position throughout the year
- Fewer errors: Digital systems can reduce manual errors in tax calculations
- More timely data: Quarterly updates provide more current information for business decisions
- Reduced January stress: Spreading the work throughout the year eliminates the annual tax return crunch
Take Michael, a self-employed consultant currently earning around £60,000. He sometimes faces cashflow issues because he doesn’t set aside enough for his tax bill.
It’s an extremely common issue – especially when you factor in payments on account – that might result in a bill of over £10,000!
Under MTD, with quarterly visibility of his position, he can better estimate and prepare for his tax throughout the year. No more brutal bills. You can’t stick your head in the sand with MTD!
How Double Point Can Help
Making the move to MTD will be challenging for many taxpayers, but you don’t have to face it alone.
At Double Point, our team of chartered accountants specialises in helping landlords and self-employed individuals prepare for and adapt to MTD.
We can:
- Assess your specific MTD requirements based on your income sources
- Recommend appropriate software solutions for your situation
- Help set up your digital record-keeping systems
- Guide you through the quarterly update process
- Review your submissions to ensure accuracy and compliance
- Identify tax planning opportunities throughout the year
The change to MTD represents both a challenge and an opportunity. With the right preparation and support, you can not only comply with the new requirements but potentially gain better financial insights and control along the way.
Get in touch for a free consultation to discuss how we can help you prepare for Making Tax Digital.
We’ll ensure you’re fully ready well before the April 2026 deadline – and can deliver ongoing support to truly master the changes!
