If you’re self-employed and earning more than £20,000 a year, Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will fundamentally alter how you report to HM Revenue & Customs (HMRC) in the near future.
Next year, MTD for ITSA is going to become a non-negotiable part of running your business and will incrementally increase its scope.
For those of you who are self-employed or a landlord with incomes over £20,000, it is time to begin preparations for its implementation.
The countdown has started
From April 2026, anyone earning above £50,000 will need to start following the new digital reporting rules.
That drops to £30,000 in 2027 and by April 2028, if you bring in more than £20,000 annually, you’ll need to be fully signed up.
If you’re self-employed and over the threshold, you are within the MTD for ITSA scope.
That includes everyone from dog groomers to barbers and hairdressers, landscapers to driving instructors.
Instead of filing just once a year, you’ll need to submit updates every quarter.
That means keeping your records in order throughout the year — not just in January when the deadline is looming.
It also means more compliance work and it could cost more time (and money) if you’re not set up for it by the deadline.
HMRC are also tightening the rules on when you report and their fines for late payments.
The new penalties will be:
- Three per cent if you’re 15 days late.
- Six per cent after 30 days.
- 10 per cent once you pass the 31-day mark.
For a small business with limited time and resources, the risk of such high penalties will come as quite a shock.
What should you do now?
We are recommending all of our clients look to get ahead of MTD for ITSA in the next few months.
This might include looking into digital bookkeeping tools and talking with your accountant to explore software that can automate the process and help you stay on track.
The earlier you prepare, the easier the transition will be and the less likely you are to end up with late fees or compliance issues.
We’re happy to help in your compliance journey.
Whether you’re already using software or need a complete digital overhaul, we’ll get you ready for what’s coming and make sure tax doesn’t take over your to-do list.
Get in touch with our experts to get ahead of your MTD for ITSA compliance.