Making Tax Digital for Income Tax is coming in April 2026. Here is everything your firm needs to understand, prepare for, and communicate to clients.
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the next phase of HMRC's Making Tax Digital programme. It requires self-employed individuals and landlords to keep digital records and submit quarterly summary updates to HMRC using MTD-compatible software.
This replaces the traditional annual self-assessment tax return with a more frequent reporting cycle: four quarterly updates, an end-of-period statement, and a final declaration.
For accounting firms, this means a fundamental shift in how you manage self-assessment clients. Instead of one annual touchpoint, you will have at least five interactions per client per year, with digital record-keeping requirements throughout.
MTD for Income Tax becomes mandatory for self-employed individuals and landlords with income over £50,000.
Extended to those with income over £30,000.
Further rollout to partnerships and lower income thresholds expected in subsequent years.
MTD for ITSA is not just a software change. It fundamentally shifts the relationship between your firm and your self-assessment clients:
Instead of gathering everything at year-end, you will need processes for collecting and reviewing data quarterly. This requires new workflows and capacity planning.
Clients must keep digital records. Those still using spreadsheets or paper will need to move to MTD-compatible software before the mandate takes effect.
Your firm needs software that can submit quarterly updates to HMRC. Check that your current tools support MTD for ITSA, not just MTD for VAT.
More frequent touchpoints mean more work. Many firms are reviewing their fee structures now to reflect the increased service level required under MTD.
The main cloud accounting platforms used by UK firms are all working on MTD for ITSA support. Here are the tools we recommend reviewing:
Xero
Full MTD for ITSA support planned
QuickBooks Online
MTD roadmap in progress
Sage Accounting
Strong HMRC compliance heritage
FreeAgent
Popular with sole traders
Dedicated tax compliance software like TaxCalc and TaxFiler also support MTD filing. See our tech stack guide for a full overview.
Identify which of your self-assessment clients fall above the £50,000 threshold and will be affected from April 2026.
Confirm your accounting software supports quarterly updates and HMRC MTD for ITSA submissions. Xero, QuickBooks Online, Sage, and FreeAgent all have MTD roadmaps.
Clients still using spreadsheets or manual records will need digital record-keeping. Start migrating them to a compatible platform now.
MTD requires quarterly summary updates to HMRC. Build recurring workflows in your practice management tool (Karbon or Senta) to handle the increased touchpoints.
Ensure staff understand the quarterly submission process, how to use MTD-compatible software for ITSA, and how to communicate changes to clients.
Do not wait until 2026. Send clear, jargon-free communications explaining what is changing, what clients need to do, and how your firm will support them.
Not sure where you stand?
Take our free MTD Readiness Checker to get a personalised score and action plan.
Take the MTD Readiness AssessmentClient communication is critical. The firms that start early will have smoother transitions and happier clients. Here is what we recommend:
Send a plain-English letter or email explaining what MTD for Income Tax means for them specifically.
Offer a short meeting or call to walk through the changes and answer questions.
Recommend a cloud bookkeeping tool if they are not already using one (Xero or FreeAgent for smaller clients).
Set expectations around quarterly touchpoints and any changes to fees.
Provide a simple checklist of what they need to have ready before April 2026.
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requires self-employed individuals and landlords to keep digital records and submit quarterly summary updates to HMRC using compatible software, rather than filing a single annual self-assessment return.
Initially, self-employed individuals and landlords with annual gross income over £50,000 from April 2026. Those with income over £30,000 will be included from April 2027. Partnerships and lower thresholds are expected to follow.
HMRC maintains a list of compatible software. The main platforms used by UK accounting firms (Xero, QuickBooks Online, Sage Accounting, and FreeAgent) all have MTD for ITSA support on their roadmaps. Dedicated tax software like TaxCalc and TaxFiler also support MTD filing.
Under MTD for ITSA, taxpayers must send summary updates of their income and expenses to HMRC every quarter, using MTD-compatible software. This is in addition to a final end-of-period statement and a final declaration (replacing the annual self-assessment return).
Effectively, yes. The quarterly updates and final declaration process replaces the traditional annual self-assessment return for those within scope. The process moves from one annual submission to four quarterly updates plus a final declaration.
Start now: audit your client base to identify who is affected, confirm your software supports MTD for ITSA, migrate clients to digital bookkeeping, build quarterly workflows, train your team, and communicate changes to clients well before the deadline.
HMRC is expected to apply penalties for non-compliance, similar to the points-based penalty system used for MTD for VAT. The best approach is to prepare well ahead rather than risk last-minute scrambles.
Book a free discovery call to discuss your MTD readiness and get a personalised preparation plan.
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