MTD ITSA
MTD for
Income Tax
Quarterly digital reporting is coming. Find out if you are in scope, what changes, and how WDS gets you MTD-ready.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax (MTD ITSA) is HMRC’s programme to introduce quarterly digital reporting for sole traders and landlords. It changes how often you report your income to HMRC — but your Self Assessment tax return carries on exactly as before.
Instead of only filing your annual Self Assessment in January, you will now also submit four quarterly digital updates of your income and expenses throughout the year, through HMRC-approved software such as Sage, Xero or QuickBooks.
Your Self Assessment return is unchanged. MTD adds the quarterly reporting layer alongside it — it does not replace it.
✅ Latest HMRC guidance: Your Self Assessment tax return continues as normal on 31 January each year. MTD adds four quarterly digital updates to your existing obligations — it does not remove you from your 2025 Tax Return.
Does MTD for Income Tax apply to you?
MTD for Income Tax applies to sole traders and landlords whose combined gross income from self-employment and/or property exceeds the threshold. HMRC will use your 2024/25 Self Assessment return to determine whether you are in the first wave from April 2026.
| Gross Income | Applies From | Status |
|---|---|---|
| Over £50,000 | 6 April 2026 | Act Now |
| Over £30,000 | 6 April 2027 | Plan ahead |
| Over £20,000 | 6 April 2028 | Subject to legislation |
⚠️ The threshold is based on gross income — turnover before expenses, not profit. A landlord receiving £55,000 in rent but with high mortgage costs is still in scope. A sole trader with £28,000 in fees and £24,000 in rental income has £52,000 combined — and would need to register from April 2026.
Your 2026/27 quarterly deadlines
For the first MTD tax year, there are four quarterly submission deadlines. Your Self Assessment return and all payment dates remain exactly as they are today.
The penalty system
MTD introduces a points-based penalty system for quarterly submissions, separate from your existing Self Assessment obligations.
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Each missed quarterly deadline = 1 point
Points accumulate across all four quarterly submissions each year.
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Four points triggers a £200 fine
Automatic — no warning. Points reset if all submissions are made on time in the following 12 months.
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Self Assessment penalties are unchanged
Your SA return continues under its existing HMRC penalty regime. MTD quarterly penalties are entirely separate.
🛡️ 2026/27 soft-landing: HMRC has confirmed no penalty points will be issued for late quarterly updates in the first year (2026/27 only). This gives businesses time to adjust — but penalties apply in full from 2027/28.
How WDS helps you transition to MTD
We have been working with Sage — one of the leading MTD-approved software providers — as a partner for over a decade. When MTD for Income Tax arrives, we are not learning alongside our clients. We are already prepared.
We have been advising businesses and individuals across Yorkshire on digital accounting since well before MTD was mandated. That experience means we can guide you through the transition practically, not just in theory.
Software Consultation
We review your current accounting setup and recommend the right MTD-approved solution — Sage, Xero, and QuickBooks.
Setup
Full implementation — bank feed connections, and testing before April 2026. We handle the technical work so you don’t have to.
Training & Onboarding
We train you and your team on the new processes. Webinars, guides, and direct support so nothing falls through the gaps.
Ongoing Quarterly Support
We support your quarterly submissions as part of our ongoing relationship — reviewing records, ensuring accuracy, and keeping you ahead of every deadline.
What you need to do before April 2026
If your gross income from self-employment and/or property exceeded £50,000 in 2024/25, you are in scope for April 2026. Here is what needs to happen before then.
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Check your qualifying income
Review your 2024/25 gross income from self-employment and property combined. Over £50,000? You are in the first wave. HMRC will have already identified you from your January 2026 return.
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Choose and set up MTD software
You need HMRC-approved software before 6 April 2026. Sage, Xero, and QuickBooks are all compliant options. WDS can advise on the best fit for your business and handle the setup.
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Start keeping digital records now
Connect your bank feed and begin recording income and expenses digitally. The businesses that find MTD easiest are those already tracking monthly — start now rather than in March.
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Talk to WDS
We are helping clients across Yorkshire prepare for MTD right now. If you are not sure whether MTD applies to you, or you want a practical plan for the transition, get in touch.
Get started
Not sure if MTD applies to you?
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We have been preparing businesses across Yorkshire for Making Tax Digital for years. One conversation is usually all it takes to know exactly where you stand and what needs to happen next.
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