Here’s What You Need to Know
If you’re a sole trader or landlord, you may soon find an official brown envelope from HM Revenue & Customs (HMRC) landing on your doormat. Inside, you’ll find important details about the upcoming Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) changes.
But what exactly is MTD for ITSA, and why does it matter to you? Let’s break it down.
What is MTD for ITSA?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is part of HMRC’s long-term digitalisation plan to modernise the UK tax system. If you’re a sole trader or landlord, you’ll soon be required to comply with new rules for record-keeping and tax reporting.
Key requirements of MTD for ITSA
Under MTD for ITSA, you will need to:
✅ Keep digital records of all income and expenses.
✅ Use HMRC-approved accounting software for bookkeeping.
✅ Submit quarterly digital updates to HMRC instead of an annual tax return.
✅ File an end-of-year digital declaration confirming your income and tax position.
Who Needs to Comply and When?
The MTD for ITSA rollout will happen in two key phases:
📌 From April 2026 – If your total self-employment and/or property income exceeds £50,000.
📌 From April 2027 – If your total self-employment and/or property income exceeds £30,000.
It’s important to note that income refers to your turnover (not profit), so even if your profits are below these thresholds, you may still need to comply.
What’s in HMRC’s MTD for ITSA Letter?
Starting April 2025, HMRC will launch a campaign to raise awareness of MTD for ITSA. If your 2023/24 Self Assessment tax return shows that your total income is over or close to £50,000, you’ll receive an official letter reminding you about the new requirements.
Received a Letter? Don’t Panic – We’re Here to Help!
Getting an official letter from HMRC can be unsettling, but there’s no need to worry. The compliance deadline is still at least a year away, giving you time to:
✔ Update your bookkeeping system
✔ Choose and implement MTD-compliant software
✔ Understand how to meet your new reporting obligations
Get MTD-Ready With Expert Help
Switching to digital tax reporting doesn’t have to be stressful. We can help you:
🔹 Select the right accounting software to stay compliant
🔹 Migrate your records to a digital system
🔹 Provide guidance and support to ensure a smooth transition
Get in touch with our team today to discuss how you can get MTD-ready with minimal hassle.
