Making Tax Digital for Income Tax: What You Need to Know

Written by Ioana Lozonchi | The Sixth Sense – Accounting Management Taxation

As we approach a new era in tax reporting, Making Tax Digital for Income Tax (MTD for ITSA) is at the forefront of HMRC’s initiative to modernise the UK tax system. If you're a sole trader, landlord, or an agent supporting clients in these categories, this guide will help you understand what MTD for ITSA means for you — and how to stay compliant and efficient with the right tools and support.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is HMRC’s plan to shift self-employed individuals and landlords from traditional annual Self Assessment tax returns to a more streamlined, digital reporting system.

From 6 April 2026, if your annual gross income from self-employment or property exceeds £50,000, you’ll need to comply with MTD for ITSA. If your income is between £30,000 and £50,000, you’ll follow suit in 2027.

Who Must Comply?

• Sole traders earning over the MTD threshold
• Landlords with rental income above the threshold
• Individuals with a combination of income streams (e.g., self-employment + property)

If you use an accountant, they can manage the entire process for you.

What You’ll Need to Do

1. Use MTD-compatible software You must maintain digital records of income and expenses using HMRC-recognised software such as Xero, QuickBooks, or Sage.

2. Submit quarterly updates Instead of one annual tax return, you’ll send four updates per year to HMRC.

3. Final End-of-Period Statement (EOPS) After the fourth quarter, you’ll send a final confirmation to HMRC summarising your total income and any adjustments.

4. Pay your tax bill by 31 January Even though reporting is more frequent, the payment deadlines remain the same.

What Software Should You Use?

Your software needs to be:

• MTD-compatible (check HMRC’s list of approved providers)
• Suitable for your accounting method (cash basis or accrual)
• Capable of managing multiple income streams (if needed)

If you’re unsure, The Sixth Sense – Accounting Management Taxation can advise on the right software solution for your business.

Why It Matters

💼 Accuracy: Reduce errors and misreporting 📅 Real-time insight: Understand your tax position throughout the year 📲 Efficiency: Simplify your record-keeping 🚫 Avoid Penalties: Stay compliant and meet new HMRC deadlines

Our Services at The Sixth Sense

At The Sixth Sense – Accounting Management Taxation, we provide end-to-end support to help you navigate the MTD transition with ease:

✅ MTD software setup and training ✅ Quarterly submissions and compliance ✅ Income projections and tax planning ✅ Full-year tax filing and advisory support

Final Thoughts

Switching to MTD for Income Tax may feel overwhelming, but with the right partner, it’s a chance to modernise your financial processes and avoid last-minute stress. Let us help you stay ahead of HMRC changes and manage your taxes the smart way.

📩 Reach out today or visit us at: www.tssamt.co.uk 📞 Let’s make your tax digital — and stress-free.

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