Wondering about Making Tax Digital (MTD) for Income Tax Self Assessment? We’ve put together this straightforward guide to help you understand what’s coming and how it affects you.
What’s MTD ITSA All About?
Think of MTD ITSA as HMRC’s way of bringing tax into the digital age. It’s designed to make managing your taxes simpler and more organised by having you keep digital records and send updates to HMRC throughout the year using specialised software. No more shuffling through paper receipts!
Does This Apply to Me?
You’ll need to join MTD ITSA if you’re:
– A self-employed individual or landlord earning more than £50,000 annually (starting April 2026)
– Someone earning between £30,000 and £50,000 from self-employment or property (starting April 2027)
If you’re earning less than £30,000, sit tight! HMRC is still working out the details for this group.
When Do I Need to Start?
The rollout is happening in stages:
– From April 2026: If you earn over £50,000
– From April 2027: If you earn between £30,000 and £50,000
What Records Will I Need to Keep?
You’ll need to track three main things digitally:
– Your income (all those lovely earnings)
– Your expenses (the costs of running your business)
– Your business-related bank transactions
Don’t worry – the right software makes this much easier than it sounds.
How Often Will I Need to Report?
The new system works like this:
- Four quick quarterly updates (think of them as mini-summaries)
- An End of Period Statement (EOPS) once a year
- A Final Declaration to confirm everything
It might sound like more work, but it actually helps spread things out rather than having one big rush at tax return time.
What About Software?
You’ll need MTD-compatible software to keep your records and submit updates. There are several brilliant options available, including:
– Xero
– FreeAgent
– QuickBooks
Not sure which to choose? We’re here to help you pick the perfect one for your needs and get everything set up properly.
What If I Don’t Comply?
We’ll be honest – HMRC may issue penalties for not following the MTD rules. But don’t worry! That’s exactly why we’re here to help you stay on track.
Will I Still Need to File a Self Assessment Tax Return?
Here’s some good news – no more traditional Self Assessment tax returns! Instead, you’ll submit your information throughout the year using your MTD software. Much more manageable.
How Can We Help?
We’re here to make this transition smooth and stress-free for you. We offer:
– Friendly, expert advice tailored to your situation
– Help choosing and setting up your software
– Support with your quarterly updates and year-end submissions
– Ongoing guidance whenever you need it
Getting Ready for MTD ITSA
Here’s your simple action plan:
1. Work out when MTD applies to you based on your income – for our current clients, we will do this for you
2. Choose your software (we can help with this!)
3. Start organising your records
4. Get in touch with us to make the whole process easier
Still Have Questions?
We’d love to chat! Every business is different, and we’re here to help you figure out exactly what MTD means for yours. Drop us a message, and let’s talk about making this transition as smooth as possible for you.
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