Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC's biggest change to how sole traders and landlords report income in a generation. From April 2026, anyone with self-employment or property income above £50,000 must keep digital records and send quarterly updates to HMRC using compatible software.
Who is affected and when
- April 2026 — sole traders and landlords with combined gross income above £50,000 for the 2024/25 tax year.
- April 2027 — the threshold drops to £30,000.
- April 2028 — the threshold drops to £20,000 (subject to confirmation).
Partnerships, limited companies and those below the threshold aren't in scope yet, but HMRC has signalled the direction of travel is one-way.
What you'll actually need to do
- Keep digital records of every income and expense transaction — no more shoebox of receipts totted up at year end.
- Send quarterly updates to HMRC (five submissions in total — four quarterly plus a final declaration).
- Use MTD-compatible software to bridge your records to HMRC. Spreadsheets can work but only with bridging software.
Quarterly update deadlines
The standard quarterly periods and filing deadlines are:
- Q1 (6 April – 5 July) → file by 7 August
- Q2 (6 July – 5 October) → file by 7 November
- Q3 (6 October – 5 January) → file by 7 February
- Q4 (6 January – 5 April) → file by 7 May
How to prepare now
The single biggest change is habit. Under MTD you can't leave receipts to pile up — you need a running digital ledger. Practical steps to take now:
- Digitise receipts at the point of purchase. Snap them on your phone the moment you get them — LedgeIt's receipt capture runs OCR so the date, vendor and total are extracted for you.
- Track mileage as you drive. Reconstructing journeys at year end is a nightmare — use live mileage tracking so every business trip is logged automatically.
- Give your accountant access. Most accountants will file the quarterly updates for you if your records are tidy. A shared portal — like LedgeIt's accountant portal — removes the year-end email chase.
Penalties
HMRC is rolling out a points-based late-submission penalty regime alongside MTD. You'll collect one point per missed submission and, once you hit the threshold for your filing frequency (four points for quarterly filers), a £200 fixed penalty applies.
The message is simple: get into a monthly bookkeeping rhythm now, before it becomes a legal requirement.