The way millions of people report and pay tax is about to change. Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is the next big step in HMRC’s digital transformation and it’s being phased in from April 2026.
If you’re a sole trader, a landlord, or both, this could affect how you manage and report your income tax. Here’s what you need to know.
Why Is MTD Happening?
MTD is designed to make tax simpler, more accurate, and more secure. By moving everyone onto approved digital software, HMRC can reduce errors, cut down on discrepancies, and improve the overall efficiency of the tax system.
Instead of juggling spreadsheets or paper records, digital systems will:
- Help you keep better, more up-to-date records
- Reduce mistakes and miscalculations
- Provide HMRC with real-time updates
- Strengthen data security
It’s also part of HMRC’s wider plan to modernise the tax system and close the “tax gap.”
Who Will Be Affected and When?
Your start date depends on your income:
- April 2026 – turnover over £50,000 (from self-employment, property, or both)
- April 2027 – turnover over £30,000
- April 2028 – turnover over £20,000
If you earn from both self-employment and property, you’ll need to report each separately.
What Will You Have to Do?
Under MTD ITSA, you’ll need to:
- Keep digital financial records using MTD-compliant software such as Xero
- Send quarterly updates of your income and expenses directly to HMRC
- Submit a year-end final declaration (replacing your current Self Assessment)
- Register for MTD ahead of your start date
The big change is that you won’t complete one annual tax return. Instead, reporting will be broken down into quarterly updates, making it easier to stay on top of things.
The Benefits of Going Digital
Moving to digital tax reporting isn’t just about compliance, it can actually make life easier:
- Save time – reduce repetitive admin with automation
- Stay accurate – real-time records mean fewer mistakes
- Keep data secure – with two-factor authentication and encrypted storage
- Work better with your accountant – instant sharing of records means smoother collaboration
How We Can Help
At Richard Riley & Associates, we’re here to take the stress out of MTD. Whether you just need help choosing the right software or you’d like us to manage the whole process, we can tailor our support to you.
We’ll:
- Recommend and set up the best MTD software
- Provide training so you’re confident using it
- Guide you through quarterly submissions
- Handle reporting and compliance if you’d prefer us to manage it all
Ready to Get Prepared?
MTD ITSA is the biggest change to Income Tax reporting in over 30 years but you don’t need to face it alone.
Get in touch with us today at Richard Riley & Associates and we can make sure you’re ready well before the deadline.