The Next Big Shift: MTD and the End of Traditional Income Tax Self Assessment (ITSA)

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Taxation in the UK is entering a new era. The government’s Making Tax Digital (MTD) initiative is being extended from VAT into Income Tax Self Assessment (ITSA). Starting in April 2026, many sole traders, landlords and self-employed individuals will need to adopt new, more frequent digital reporting requirements.

If you currently submit a single yearly tax return, it’s important to understand what’s changing and how to prepare.

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Under the new rules, taxpayers in scope will no longer rely solely on an annual Self Assessment return. Instead, they will need to keep digital records of all relevant income and expenses using MTD-compatible software, submit quarterly updates to HMRC and make a final digital declaration at the end of the tax year, similar to the current tax return.

From 6 April 2026, MTD will apply to individuals with income over £50,000 from self-employment and/or property, with the threshold reducing to £30,000 from April 2027 and expected to expand further from 2028.

These changes are significant. Quarterly reporting provides better visibility of your tax position throughout the year, helping to avoid large, unexpected bills at year-end. It also encourages more disciplined bookkeeping and reduces the last-minute pressure of pulling everything together once a year.

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The move to digital systems should make managing finances easier and more efficient. Good accounting software can automate many tasks such as expense tracking and report generation, reducing the risk of errors. However, with more frequent reporting, HMRC will be able to identify discrepancies earlier, and late or incorrect submissions could lead to penalties.

You’re likely to be affected if you’re a sole trader, landlord, or bookkeeper who submits client tax returns. If your total income from self-employment and property exceeds £50,000 (or £30,000 from 2027), you’ll fall within MTD from April 2026.

Now is the time to prepare. Review your income to check if you’re within scope, assess your record-keeping systems, and start moving towards MTD-compatible software. It’s also worth discussing the transition with your accountant to ensure you’re ready for quarterly submissions and aware of any additional requirements.

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To help clients and local businesses prepare, we’re running a series of free MTD information seminars . Our experts will explain how MTD for Income Tax will work in practice, what software you’ll need, how to stay compliant and avoid penalties, and the practical steps to take before April 2026.

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Reserve your place today  spaces are limited. See link below.

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The move to Making Tax Digital marks a major change in how individuals and businesses report their income. By preparing early and attending one of our seminars, you can approach the transition with confidence and turn it into an opportunity for better financial control and accuracy.

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If you’d like tailored advice or to discuss your readiness for MTD, please get in touch, we’re here to help.