1. What is MTD ITSA?
MTD ITSA (Making Tax Digital for Income Tax Self-Assessment) is part of HMRC’s initiative to modernise the tax system. It requires self-employed individuals and landlords to keep digital records of their income and expenses and submit quarterly updates to HMRC using MTD-compatible software.
2. Who does MTD ITSA apply to?
MTD ITSA applies to:
- Self-employed individuals and landlords with annual business or property income exceeding £50,000 from April 2026.
- Those earning between £30,000 and £50,000 will need to comply from April 2027.
Future plans for individuals earning below £30,000 are still under consultation.
3. When does MTD ITSA start?
- April 2026: For individuals earning over £50,000 annually.
- April 2027: For individuals earning between £30,000 and £50,000 annually.
4. What records do I need to keep digitally?
You’ll need to maintain digital records of:
- Income
- Expenses
- Bank transactions related to your business or property
These records must be stored in MTD-compatible software and submitted to HMRC via quarterly updates.
5. How often do I need to report under MTD ITSA?
You’ll need to submit:
- Four quarterly updates summarizing your income and expenses throughout the year.
- An End of Period Statement (EOPS) at the end of the tax year to confirm your figures.
- A Final Declaration to declare all your income and confirm your tax liability.
6. What software do I need for MTD ITSA?
You’ll need MTD-compatible software to manage your records and submit updates. Popular options include:
- QuickBooks
- Xero
- FreeAgent
We can help you choose the best software for your needs and set it up for you.
7. What happens if I don’t comply with MTD ITSA?
Failure to comply with MTD ITSA requirements may result in penalties from HMRC. These could include fines for late submissions or non-compliance with digital record-keeping rules.
8. Do I still need to file a Self-Assessment tax return?
No, MTD ITSA replaces the traditional annual Self-Assessment tax return. Instead, you’ll submit quarterly updates, an EOPS, and a Final Declaration through your MTD-compatible software.
9. How can Guida Accountancy help me with MTD ITSA?
We provide:
- Expert advice tailored to your situation.
- Setup and training for MTD-compatible software.
- Assistance with quarterly updates and year-end submissions.
- Ongoing support to ensure compliance and peace of mind.
10. What should I do now to prepare for MTD ITSA?
- Determine when MTD ITSA will apply to you based on your income.
- Choose and set up MTD-compatible software.
- Organize your records to ensure accuracy.
- Seek professional advice to streamline the transition.
Still Have Questions? We’re Here to Help!
Contact us below and we’ll support you along your MTD ITSA journey.
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