Introducing MTD for ITSA

by Michael Blaken

HMRC is, from April 2026, finally introducing the long-heralded changes to reporting income tax for sole traders, self-employed people and landlords, who file their tax returns through self-assessment.

Known as Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA), if you fall into one of these groups and you earn more than £50,000 a year, you will be contacted by HMRC.

How the self-assessment system is changing

Currently, a self-assessment tax return is filed annually. Under MTD for Income Tax, starting April 6, 2026, those affected will need to:

• Keep digital records of all income and expenses
• Submit quarterly updates to HMRC using MTD-compatible software
• Complete an end-of-period statement (EOPS) and final declaration each year
• Pay tax due by January 31 the following year (and, as happens currently, payments are made on account every six months)
  
  

What you need to do

HMRC’s letters have started arriving – you may already have one – so now is the time to get ready.

• First, check if you are affected. If your self-employment or property income is over £50,000, you’ll need to comply from April 2026. HMRC will notify affected taxpayers based on their 2023-24 self-assessment returns.
• Select software. MTD requires you to use compatible software for record-keeping and submissions. If you’re unsure, we can guide you to the best solution.
• Decide when to sign up:
  • Early sign-up (2025-26 tax year): This is an option which you can take, so you become accustomed to MTD before it’s mandatory, with access to HMRC support.
  • Standard sign-up (2026-27 tax year): Wait until April 2026 to comply.
• Explore exemptions. Some individuals might be exempt due to age, disability, or lack of digital access. If you think this applies to you, we can help with your application.

How our specialist tax team can help

At Optimum, we are ready to make your MTD transition smooth. We can help with:

• Setting up your digital record-keeping
• Choosing and integrating the right accounting software
• Providing ongoing support for stress-free quarterly reporting

Even though the rules don’t kick in until April 2026, getting ready now is crucial. Early preparation means no last-minute stress and ensures you are fully prepared for the upcoming changes.

Please get in touch with the Optimum team, or send us an email. We work with many sole traders, self-employed people and landlords across Swindon, Wiltshire, Cheltenham and Gloucestershire.