Making Tax Digital for ITSA 2026
From 6 April 2026, HMRC's Making Tax Digital for Income Tax Self Assessment (MTD ITSA) becomes mandatory for self-employed individuals and landlords with combined business and property income above £50,000 a year. Quarterly digital submissions replace the once-a-year Self Assessment return for affected taxpayers.
MTD ITSA rollout timeline
| Effective | Income threshold | In scope |
|---|---|---|
| 6 April 2026 | £50,000+ | Phase 1 - self-employed + landlords |
| 6 April 2027 | £30,000+ | Phase 2 - threshold drops |
| 6 April 2028 | £20,000+ | Phase 3 - smaller traders + landlords |
| TBC | Below £20,000 | Voluntary; mandatory date not yet legislated |
Quarterly submission deadlines
| Quarter | Period | Deadline |
|---|---|---|
| Q1 | 6 April - 5 July | 5 August |
| Q2 | 6 July - 5 October | 5 November |
| Q3 | 6 October - 5 January | 5 February |
| Q4 | 6 January - 5 April | 5 May |
| EOPS + Final Declaration | Tax year | 31 January following year-end (same as current SA) |
Penalty regime
MTD ITSA uses a points-based system that ramps with each missed submission rather than a flat per-miss fine. Quarterly filers reach the penalty threshold at 4 points, monthly filers at 5 points. Each point lasts 24 months from issue. Points cleared back to zero by completing all submissions on time for the required period of good behaviour.
- 1 point per missed quarterly submission.
- £200 penalty at 4 points (quarterly), plus £200 per subsequent miss.
- Late tax payment: 3% interest from due date + 5% surcharge at 30 days + 10% at 12 months (annualised).
- 2026/27 is a "soft landing" year - HMRC has indicated reasonable-effort errors will not be penalised.
Frequently asked questions
- When does MTD ITSA become mandatory?
- Making Tax Digital for Income Tax Self Assessment (MTD ITSA) becomes mandatory from 6 April 2026 for self-employed individuals and landlords with combined business / property income above £50,000 a year. The £30,000 threshold (Phase 2) follows from 6 April 2027, and £20,000 (Phase 3) from 6 April 2028 under current legislation.
- Who is in scope from April 2026?
- Self-employed sole traders, partnerships, and landlords with combined gross income from those sources exceeding £50,000 in the 2024/25 tax year. HMRC determines mandation based on income reported on the most recent finalised Self Assessment return. Existing limited-company directors and PAYE-only employees are NOT in MTD ITSA scope - they remain on annual SA.
- What does MTD ITSA actually require?
- Four quarterly submissions of income and expense totals through HMRC-approved digital record-keeping software, by the 5th day of the month after each quarter end (5 August, 5 November, 5 February, 5 May). After the tax-year end, an End of Period Statement (EOPS) and Final Declaration replace the current Self Assessment return. All bookkeeping must be kept digitally - paper records or spreadsheets without API integration no longer suffice.
- Can I keep using a spreadsheet?
- Yes, but only via "bridging software" that connects the spreadsheet to HMRC's API. Pure offline spreadsheets without API integration do not meet MTD requirements. The simpler route is one of the dozens of HMRC-approved cloud accounting tools (Xero, FreeAgent, QuickBooks, Sage, etc) which handle the API submissions automatically.
- What happens if I miss a quarterly submission?
- MTD ITSA uses a new points-based penalty system. Each missed submission accrues 1 point; reaching 4 points (for quarterly filers) triggers a £200 penalty plus additional £200 charges for each subsequent miss until the slate is wiped clean by 24 months of on-time submissions. Late payment of tax attracts separate interest charges. The first year (2026/27) is a 'soft landing' period during which HMRC has indicated it will not penalise reasonable-effort errors.
- How do I prepare?
- Three steps before April 2026: (1) choose HMRC-approved MTD-compatible software and onboard your existing year's books to it; (2) confirm with HMRC whether you are mandated based on your 2024/25 return; (3) practice the quarterly cadence in 2025/26 voluntarily - HMRC opens a sandbox for early adopters. Most accountants and bookkeepers will offer MTD ITSA migration help and ongoing quarterly compliance as a paid service.