The UK government’s initiative called Making Tax Digital for Income Tax Self Assessment, or MTD for ITSA, is centred around the digitalisation of the country’s tax system. In short, MTD for ITSA is a must for the self-employed. It also applies to landlords earning more than £30,000.

Keep reading to find out more about how the system works, what your responsibilities are, and everything about getting the right systems in place to stay compliant.

What Does Making Tax Digital for Income Tax Mean?

This is the UK government’s new system for income and expense reporting for sole traders and landlords. This system requires you to use the latest software integrated with Making Tax Digital for Income Tax. The software will be used for:

• Entering and storing digital business records, including income and expenditures.
• Correcting the records when needed.
• Informing HMRC of quarterly updates.
• Submitting tax returns and paying tax by January 31 of the following year.

Making Tax Digital for Income Tax: Applies to Whom?

MTD for ITSA applies to the following:

• Individuals registered for Self Assessment
• Self-employed people
• People earning income from property (landlords)
• Or both self-employment and property income combined
  

This applies if your combined gross income from self-employment and property is more than £30,000 in a tax year. This combined amount is called “qualifying income.” Income from other sources, like employment or foreign earnings, does not count towards this threshold.

Signing Up for MTD for ITSA — Optional for Now

At present, signing up for MTD for ITSA is voluntary. If you choose to sign up voluntarily, you need to tell HMRC your reason, such as:

• Testing the system
• Signing up early to be ready when the service becomes mandatory
  

From April 6, 2026, depending on your total qualifying income from property, self-employment, or both, you will be required to use MTD for ITSA.

Do You Need to Use MTD for ITSA?

If you’re unsure whether you qualify, you can use the UK government’s online tool to check your eligibility. This tool looks at your combined qualifying income for the tax years 2024-2025 and 2025-2026. Note: Foreign income is not included when calculating your qualifying income for MTD ITSA.

If you have questions or want professional advice, you can speak with expert accountants at Cangaf Ltd.

Things to Consider Before Starting

For the tax years 2024-2025 (ending April 5, 2025) and 2025-2026 (ending April 5, 2026), keep these in mind:

• Whether you need to file a Self-Assessment tax return
• Which income sources do you need to declare
• The income you expect from property or self-employment

Important Dates to Know

Starting April 6, 2026, MTD for ITSA will become compulsory in phases. Signing up remains voluntary now, so you can be part of HMRC’s testing process.

If your qualifying income is £30,000 or less, you won’t be required to use MTD for ITSA yet.

Currently, the first phase requires taxpayers with qualifying income over £50,000 to use MTD from April 6, 2026.

The second phase applies to those with a qualifying income over £30,000 from April 6, 2027.

Details for partnerships and their eligibility for MTD ITSA will be announced later.

Note: People who become landlords or sole traders after April 6, 2026, can voluntarily sign up anytime but will not be required to use MTD ITSA until after they submit their first Self Assessment return.

Eligibility for MTD ITSA from April 6, 2026

Starting April 6, 2026, MTD for ITSA applies to:

• Individuals registered for Self Assessment
• Those with qualifying income (combined self-employment + property income) over £50,000 in the 2024-25 tax year

How to Start Using MTD ITSA from April 6, 2026

• Submit your 2024-25 Self Assessment tax return by January 31, 2026
• HMRC will review your return
• If your qualifying income is over £50,000, HMRC will notify you to start using MTD for ITSA by April 6, 2026
• After receiving this notification, you will need to find software that integrates with MTD for ITSA and sign up for MTD for ITSA.

Eligibility for MTD ITSA from April 6, 2027

Starting April 6, 2027, MTD for ITSA applies to:

• Individuals registered for Self Assessment
• Those with a qualifying income over £30,000 in the 2025-26 tax year

How to Start Using MTD ITSA from April 6, 2027

• Submit your 2025-26 Self Assessment tax return by January 31, 2027
• HMRC will review your return
• If your qualifying income is between £30,001 and £50,000, HMRC will notify you to start using MTD ITSA by April 6, 2027
• After receiving this notification, you will need to find compatible software & sign up for MTD for ITSA.

Exemptions from MTD for ITSA

Some people are automatically exempted, including:

• Trustees of charities or non-registered pension schemes
• People without a National Insurance number
• Lloyd’s members
• Non-resident businesses
• Personal representatives of a deceased person
  

Automatic exemptions do not require you to apply for one.

If you are not automatically exempted, you may be eligible for an exemption if you can prove you’re unable to use digital software to maintain records and file returns (for example, due to disability or other valid reasons).

Have more questions about Making Tax Digital for Income Tax? Speak with the professional accountants at Cangaf Ltd. for expert advice and support.

Frequently Asked Question