Personal Tax Accounts
From April 2026, the way many sole traders and landlords report their tax to HMRC will start to change under Making Tax Digital for Income Tax Self Assessment (MTD ITSA).
Who will be affected and when?
If your total income from self employment and property is over £50,000, you are expected to come into MTD ITSA from April 2026.
If it is over £30,000, you will be brought in a year later, from April 2027
The government intends to extend this further to those with income over £20,000 from April 2028.
Income from employment, pensions, dividends and most partnership income does not count towards these limits.
We can help you check whether you are within scope based on your 2024/25 tax return, which HMRC uses to decide who needs to join first.
What will change?
If you are within MTD ITSA you will:
Keep your business and property records in a digital format (for example, in accounting software or a suitable app);
Send quarterly updates of your income and expenses to HMRC for each business and property business; and
Send a final annual submission through MTD compatible software by 31 January after the tax year, instead of filing your usual online Self Assessment tax return.
The quarterly reports will usually only need headline figures for income and expenses. If your turnover is below the VAT threshold, each quarterly update can be as simple as a total income figure and a total expenses figure.
What should you start thinking about now?
Over the next year, it is sensible to:
Check your income levels – we can confirm whether your self employment and property income mean you are likely to be in the first wave from April 2026
Choose suitable software – you will need software that can keep digital records and submit MTD updates and your final declaration to HMRC. We can help you pick a package that fits your business.
Tidy up your record keeping – aim to record income and expenses regularly and clearly, so quarterly updates are straightforward.
Decide who will do what – you can continue to ask us to handle submissions on your behalf, or you can take more of the process in house with our support.
What will you need to do once MTD ITSA starts?
In practical terms, when you are within MTD ITSA you will need to:
Keep your sales and expenses information in digital form throughout the year;
Make four quarterly submissions to HMRC, using MTD compatible software, by 5 August, 5 November, 5 February and 5 May; and
Review and finalise the figures after the year end and submit your final declaration by the following 31 January, including any other income not reported quarterly.
What if you do nothing?
MTD ITSA is not optional if you are within scope. HMRC will expect digital records and timely quarterly and annual submissions.
If you fall behind – for example by missing deadlines, failing to use compatible software or not keeping proper digital records – HMRC can charge penalties and interest, in line with the normal self assessment rules and its wider digital regime.
There is still time to get ready, and we will support you through the change. The key is to start planning now: check if, and when, you are affected, move towards digital record keeping, and talk to us about software and how we can help manage the quarterly and annual submissions for you.
If you need any tax advice in Milton Keynes give a call to the team at Holmes Accountancy on 01908 315716 or contact us here.
The tax tip is provided for general guidance only; further advice should be sought, for specific issues.
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