Here’s What You Need to Know
If you’re a sole trader or landlord and your 2023/24 self-assessment tax return showed income over or close to £50,000, you may soon receive an official letter from HM Revenue & Customs (HMRC). Inside will be important information about Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) – a significant change in how self-employed individuals and landlords report their income.
What is MTD for ITSA?
MTD for ITSA is HMRC’s new system to modernise income tax reporting. It will replace the traditional annual self-assessment tax return with digital record-keeping and more frequent submissions, using HMRC approved MTD-compatible software. If you’re within the scope of MTD for ITSA, you’ll need to keep digital records and submit information to HMRC throughout the year – not just once.
What’s Changing?
Under the new rules, instead of filing one yearly tax return, you’ll be required to:
- Keep digital records of income and expenses using MTD-compatible software
- Submit quarterly updates to HMRC (via software) within one month after each quarter ends
- Submit a final year end statement – similar to the current tax return (through the same software)
Paper records will no longer be accepted by HMRC. Digital compliance will be mandatory.
Who Will Be Affected and When?
MTD for ITSA will be introduced in three phases, based on your gross qualifying income (total income before expenses from self-employment and/or property rental):
- From April 2026, for those with gross qualifying income over £50,000
- From April 2027, for those with gross qualifying income over £30,000
- From April 2028, for those with gross qualifying income over £20,000
These rules apply only to individuals (not companies). Partnerships are not yet included but HMRC plans to extend the rules in future phases.
Income tax payment deadlines will remain unchanged
Received a Letter? Don’t Worry, We’re Here to Help!
An HMRC letter can feel daunting but there’s no need to panic. The good news for Clear Vision clients is that we’re already preparing for MTD for ITSA – and we’re here to support you, every step of the way. As your trusted tax agent, we can:
- Manage your MTD registration directly with HMRC
- Help you set up MTD-compliant software, such as Xero (if you aren’t using this already)
- Provide ongoing support to ensure timely, accurate submissions
Please note, HMRC will not automatically enrol you into MTD for ITSA – action will be required. Also, not receiving a letter doesn’t mean you’re exempt from the new rules. To see if you may qualify for an exemption, refer to the official GOV.UK Guidance.
If you’re unsure whether these changes apply to you, please contact us for clarification.
How Should You Prepare?
Although April 2026 may feel a long way off, now is the ideal time to start planning. You should begin considering whether you will:
- Complete and submit the quarterly updates yourself using digital accounting software
- Appoint Clear Vision to manage the quarterly submissions and compliance on your behalf
Please note, these changes will increase the need for regular record keeping and more frequent contact with our tax team.
To ensure we’re fully equipped to support all our clients effectively, we kindly ask you to speak with us soon about how you’d like to manage these changes.
Why it’s Smart to Act Early
Getting ahead of the game offers clear advantages – you:
- Avoid last-minute stress when the rules come into force
- Familiarise yourself with the software and process at your own pace
- Benefit from clearer financial insights throughout the year
- Give us time to plan and deliver the best possible support for you
We understand that Making Tax Digital for Income Tax may feel like an extra administrative burden but rest assured, you’re not on your own. As your professional adviser, we’re here to guide and support you through every stage.
If you have any questions or would like to discuss your next steps, please don’t hesitate to get in touch. For more information, please refer to the GOV.UK Guide.
We’re here to help with the new Making Tax Digital for Income Tax Self-Assessment requirements – just get in touch. Call our friendly team on 01249 712074 or email theteam@cvag.co.uk