Making Tax Digital (MTD) for Income Tax, also known as MTD for Income Tax Self Assessment (MTD for ITSA), will change the way millions of business owners and landlords report their earnings to HMRC.
What is Making Tax Digital
A UK Government initiative that sets out a bold vision for a digital tax system with the objective being to “make it easier for individuals and businesses to get tax right and keep on top of their affairs”.
To make tax administration more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system.
Who will it impact?
- Construction workers
- side hustlers
What Does it mean for the self-employed
- All self-employed people and landlords with a total income (from business or property) above £10,000 will need to follow MTD rules for ITSA from 6 April 2026.
- Sole traders earning below this threshold can continue to use the old HMRC system for filing their returns.
- If you own multiple businesses, the income earned from all of them contributes to the £10,000 threshold.
- Instead of using HMRC’s website to file returns, you’ll need to keep digital records and use compatible software.
- If you meet the criteria then you have to comply with MTD for ITSA, unless you’re digitally exempt. This may be because:
- of your age;
- of a disability;
- you are running your business from a remote geographical location;
- you object to using computers on religious grounds; or
- of any other reason why it’s not reasonable or practical.
What will you need to file?
- From 6 April 2026, the self-employed will need to keep digital records of income and expenditure. There are three parts you’ll need to submit for MTD for ITSA:
- Quarterly updates. These should include all business income and expenditure.
- End of Period Statement (EOPS). You’ll need to submit one of these per year, for each source of income.
- Final declaration. This is where you’ll need to share details of all other taxable income, including investments and savings interest by 31 January every year.
- Making Tax Digital for Income Tax Self Assessment (ITSA) comes into effect from 6 April 2026.