Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) is a key change in the UK tax system that will affect self-employed individuals and landlords. Originally set for earlier dates, it is now scheduled to come into effect in April 2026.
What Is MTD for ITSA?
MTD for ITSA will require self-employed people and landlords with a total business or property income above £50,000 to keep digital records and send quarterly updates of their income and expenses to HMRC using compatible software. From April 2027, this requirement will extend to those with income over £30,000.
Key Points:
- Start Date: April 2026 for those earning above £50,000, and April 2027 for those earning above £30,000.
- Quarterly Reporting: Instead of one annual tax return, you’ll submit quarterly updates.
- Digital Record-Keeping: You’ll need to use MTD-compatible software to keep track of your income and expenses.
MTD for ITSA aims to simplify the tax process and reduce errors, but it also means adjusting to new ways of managing your financial records.
How does it affect partnerships and landlords with jointly owned property?
- Partnerships: MTD for ITSA will eventually apply to partnerships, but this won’t be until after April 2027. Further details will be announced closer to the time.
- Jointly Owned Property: For landlords who own property jointly, each person will need to comply with MTD if their share of income exceeds the relevant threshold (£50,000 from April 2026 or £30,000 from April 2027). Each owner will be responsible for keeping digital records and submitting their portion of the income separately using MTD-compatible software.