Are you a landlord or sole trader?

HMRC’s Making Tax Digital initiative has been gradually evolving over the past few years. It is important to note that it will soon be mandatory for landlords and small businesses who pay tax through self-assessment to use HMRC’s digital tax platform.

Making Tax Digital for Income Tax & Self-Assessment (or MTD for ITSA, as it is more commonly known) is likely to be a major change for some taxpayers.

So, are you prepared for the upcoming MTD for ITSA rules?

What is MTD for ITSA?

Making Tax Digital (MTD) is aimed to modernise the tax process by transitioning from annual paper and online tax submissions to quarterly digital uploads of your tax information.

At the core of MTD is the requirement for taxpayers to maintain detailed digital records. Taxpayers will need to record all incoming and outgoing transactions using compatible accounting software and then share this information in an approved digital format with HMRC.

Who will be affected by the MTD for ITSA rules?

If you are a landlord or sole trader who falls into the following categories, MTD for ITSA will soon become a mandatory requirement:

– From April 2026, for those with qualifying income over £50,000

– From April 2027, for those with qualifying income over £30,000

How do you get ready for MTD for ITSA?

If you are already using cloud accounting software to manage your finances, MTD for ITSA won’t be a major challenge. However, if you have not adapted to the modern accounting technology, it is important to upgrade ASAP. We can support our clients with this transition.

To stay compliant, you will need to:

– Keep your records in a digital format

– Provide digital quarterly updates to HMRC

– Be able to provide your ITSA return information to HMRC through MTD-compatible software.

– Talk to us about preparing for MTD for ITSA

If you are concerned about how MTD for ITSA may affect your finances, come and talk to us.

We will advise you on the most suitable accounting software and offer guidance on upgrading and preparing your bookkeeping, accounting, and tax procedures to seamlessly comply with MTD for ITSA.