6th May 2025
The Government’s Making Tax Digital (MTD) initiative continues to reshape the way individuals and businesses manage their tax affairs. While many are familiar with MTD for VAT, the next phase—Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA)—is set to significantly change how self-employed individuals and landlords report their income to HMRC.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is part of the government’s plan to make tax administration more efficient, effective, and easier for taxpayers. Under MTD for ITSA, qualifying individuals will need to keep digital records and send income and expenses updates to HMRC every quarter using MTD-compatible software.
Who Does It Apply To?
From April 2026, MTD for Income Tax will apply to:
- Self-employed individuals and landlords with a total annual income of over £50,000.
- From April 2027, the threshold lowers to those earning over £30,000.
It’s important to note that this income threshold is based on gross income, not profit, and includes income from all relevant sources (e.g., self-employment and property rental combined).
Those earning below £30,000 or who fall into certain exemption categories (such as digital exclusion or religious grounds) are not currently required to comply.
What Will You Be Legally Required to Do?
If you fall within the MTD for ITSA threshold, you will need to:
- Keep digital records of your income and expenses using compatible software.
- Submit quarterly updates to HMRC summarising your income and expenses.
- Submit an End of Period Statement (EOPS) at the end of the tax year.
- File a Final Declaration, confirming all sources of income and any necessary tax adjustments.
This means the traditional once-a-year tax return will be replaced by a more continuous and digital approach to tax reporting.
How THL Accountancy Can Help
Transitioning to MTD for Income Tax might feel daunting, but THL Accountancy is here to make it simple.
Here’s how we can support you:
- ✅ MTD-Ready Software Setup: We help you choose and set up HMRC-compliant software that fits your business.
- ✅ Digital Record-Keeping Support: Our team can guide you through maintaining accurate digital records or manage this entirely on your behalf.
- ✅ Quarterly Submissions: We take the stress out of compliance by preparing and submitting your quarterly updates and final declarations.
- ✅ Tailored Advice: Every business is different. We provide personalised tax planning and advice to keep you compliant and tax-efficient.
Don’t Wait Until the Deadline
Preparing early for MTD for Income Tax is the best way to ensure a smooth transition. Whether you’re a sole trader, a landlord, or both, THL Accountancy offers the expertise and tools you need to stay ahead.
📞 Contact us today to arrange a free consultation and find out how we can simplify your tax affairs under Making Tax Digital.
THL Accountancy – Making tax digital, simple.