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MTD ITSA: What You Need to Know

Accounting
July 21, 2025•3 min read

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) is one of the biggest changes to the UK tax system in recent years. If you're self-employed or a landlord, it's essential to understand what this means for you and how to prepare.

At Corbar Accounting, we’re here to make the transition smooth and stress-free.

Whilst things are still being finalised at HMRC and so therefore may change - here’s everything we know as of today.

What Is MTD ITSA?

MTD ITSA is part of HMRC’s wider Making Tax Digital initiative. It requires eligible individuals to:

  • Keep digital records of income and expenses

  • Submit quarterly updates to HMRC

  • Use MTD-compatible software to manage and report financial data

The goal? A more efficient, accurate, and modern tax system.

Who Needs to Comply?

MTD ITSA will be rolled out in phases:

  • From April 2026: Self-employed individuals and landlords with revenue over £50,000 annually

  • From April 2027: Self-employed individuals and landlords with revenue over £30,000 annually

  • From April 2028: Self-employed individuals and landlords with revenue over £30,000 annually

What This Means For You?

To comply with MTD ITSA, you’ll need to:

Keep digital records of:

  • Income

  • Expenses

  • Business-related bank transactions

Submit reports via MTD-compatible software:

  • Quarterly updates throughout the year

  • An End of Period Statement (EOPS) to finalise your figures

  • A Final Declaration to confirm your total income and tax liability

What Software Do You Need?

You’ll need to use MTD-compatible software such as:

  • Xero

  • QuickBooks

  • FreeAgent

At Corbar Accounting, we can help you choose the right software, get it set up, and train you to use it confidently.

What If You Don’t Comply?

Non-compliance could lead to penalties from HMRC, including:

  • Fines for late submissions

  • Penalties for not keeping digital records

Avoiding these is simple with the right support and systems in place.

Does This Replace the Self-Assessment Tax Return?

Yes and no. The final stage of the new annual process will be to submit your self-assessment tax return, which will be similar to how it is today – to date the deadlines and process for this remain as they are (submission by 31st Jan following the end of the tax year).

How Corbar Accounting Can Help

We’re here to guide you every step of the way. You can check out of full range of options for sole traders here.

From April 2026 all of our Sole Trader options will support you in the transition to MTD. Options include:

  • Our completely done for you service – from £199pm including VAT

  • Our hybrid model – where you do some and we do some from £85pm including VAT

  • Our DIY model – The Bookkeeping Hive, Your Business, Your Finances, Out Support – the new membership from £35pm including Vat – join the waitlist here.

What Should You Do Now?

Here’s how to get started:

✅ Check your income to see when MTD ITSA applies to you

✅ Choose and set up MTD-compatible software

✅ Organise your records to ensure accuracy

✅ Get expert advice to make the transition seamless

Still Have Questions?

We’re here to help. We can support self-employed individuals through the MTD ITSA journey. Whether you’re just getting started or need hands-on support, we’re just a call or email away.

📞 Contact us today https://calendly.com/hayley-corbar/new-client-discovery-call

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