Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is an HMRC initiative that requires self-employed people and landlords to keep digital records and submit quarterly updates instead of a single annual Self Assessment tax return. It applies to anyone with qualifying income over the relevant threshold.
What are the MTD ITSA deadlines?
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The mandation dates are: 6 April 2026 for those with qualifying income over £50,000; 6 April 2027 for income over £30,000; and 6 April 2028 for income over £20,000 (subject to confirmation). Partnerships are expected to be brought in at a later date.
What counts as "qualifying income" for MTD?
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Qualifying income includes self-employment income (gross turnover, not profit), UK property income, and in some cases employment income. HMRC uses gross income before expenses. If you have multiple income sources, they may all count toward the threshold.
What happens if I miss the MTD deadline?
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HMRC uses a points-based penalty system. Each missed submission earns one penalty point. Once you accumulate enough points (2 for annual, 4 for quarterly), you're charged a £200 fine. HMRC may issue additional penalties for continued non-compliance.
Do I need to submit quarterly returns under MTD ITSA?
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Yes. Under MTD ITSA you'll submit four quarterly updates per year (summary income and expenses), plus a final declaration (replacing the Self Assessment return) at the end of the tax year. Each quarterly update covers a 3-month period.
What software do I need for MTD ITSA?
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You need HMRC-recognised MTD-compatible software that can maintain digital records and submit updates directly to HMRC's API. Spreadsheets alone are not sufficient unless used with bridging software. Neatly is built specifically for UK sole traders and is designed to be MTD ITSA compatible.