MTD for ITSA: what’s changing (and when)

MTD for ITSA brings in a new way of reporting your self-employed and/or property income to HMRC. Instead of one annual Self Assessment return covering everything, you’ll be expected to:

• keep digital records (within compatible software),
• send quarterly updates for each business/property source,
• submit an end of period statement (EOPS) to finalise each source, and
• submit a final declaration to confirm your overall tax position for the year.

Qualifying income generally means your gross income from self-employment and/or property (before expenses). If you have both a trade and rental income, HMRC will look at the combined total for the threshold.

So yes — more is digital. But “digital” mainly describes how you keep records and submit updates, not whether the underlying tax rules become simpler.

If MTD is digital, what does the software actually do?

MTD-compatible software can be genuinely helpful. In practical terms, good software can:

• pull transactions in from your bank feed,
• help you categorise income and expenses,
• store photos/scans of receipts,
• track mileage (if you use an app),
• produce basic reports, and
• submit quarterly updates to HMRC.

But software can’t reliably do the parts that depend on judgement, tax knowledge, and context — for example, whether something is allowable, whether you should use the cash basis, how to treat a one-off purchase, or how to handle mixed personal/business use.

So… do you still need an accountant under MTD for ITSA?

Some people will manage without an accountant, especially if their affairs are simple, they’re comfortable with bookkeeping, and they have the time to stay on top of quarterly deadlines.

However, many self-employed people and landlords find that MTD increases the number of moving parts. The question becomes less “Can I do it?” and more:

• Will I do it accurately?
• Will I do it on time?
• Am I claiming everything I’m entitled to?
• Am I avoiding common (and expensive) mistakes?

An accountant’s role doesn’t disappear under MTD — it shifts. Instead of focusing mainly on an annual tax return, we help you build a system that stays compliant all year round.

What an accountant still does that software doesn’t

Quarterly updates: why they still need care

Under MTD for ITSA, you’ll typically submit four quarterly updates during the tax year. These updates are intended to give HMRC a picture of your income and expenses as you go.

It’s important to understand two practical points:

1. Quarterly updates are not the same as final accounts. Adjustments often happen later (for example, accounting adjustments, capital allowances, or corrections).
2. “Digital” doesn’t mean “automatic”. Bank feeds are helpful, but they still need review. Duplicate transactions, personal spending, transfers between accounts, and card processor fees can all distort the picture.

If you’re thinking, “Can’t I just file nil updates and sort it out at year end?” — that approach is risky. HMRC expects updates to reflect what’s actually happening. Even where estimates are allowed in some circumstances, the aim is timely, meaningful reporting, not placeholder submissions.

Year-end under MTD: it doesn’t disappear, it changes shape

Many people assume MTD removes the year-end tax return. In reality, you still have a year-end process — it’s just split into separate steps:

• EOPS (End of Period Statement): this finalises each business or property income source.
• Final declaration: this confirms your total taxable income, including things that sit outside the quarterly updates (for example, employment income, dividends, savings interest, pension contributions, and reliefs).

In plain terms: quarterly updates are the rhythm, but the year-end is still where the accuracy really matters.

Common areas where DIY MTD records go wrong

These are the issues we most often see when people try to manage everything alone:

• Mis-categorised expenses (especially where the bank description is unclear).
• Missing receipts or no evidence for claims.
• Private use not accounted for (mobile phone, broadband, vehicle, home costs).
• Capital vs revenue confusion (equipment purchases, improvements, initial set-up costs).
• Not claiming what’s available (for example, simplified expenses, use of home, or legitimate professional costs).
• Property pitfalls: repairs vs improvements, letting agent statements, mortgage interest restrictions, and timing differences.

Individually, these mistakes can look small. Over a year — and across multiple quarterly submissions — they can add up to incorrect tax, stress at finalisation, and avoidable HMRC queries.

What this means in practice for self-employed people and landlords

If you’re self-employed, MTD for ITSA pushes you towards a more “business-like” rhythm: keeping records up to date and checking your figures every quarter. That can be a good thing — but only if the system fits your working life.

If you’re a landlord, it often means getting clearer records around rental income, allowable expenses, and timing. Many landlords have perfectly good paperwork, but it isn’t always in a format that flows smoothly into MTD software.

Either way, an accountant can help you set routines that are manageable: what to capture, how often, and how to avoid last-minute panic before each quarterly deadline.

Do you have to pay tax quarterly under MTD for ITSA?

This is a very common worry. MTD for ITSA introduces quarterly reporting, but it doesn’t automatically mean you’ll pay Income Tax four times a year.

HMRC’s longer-term direction is towards more real-time information, and there have been discussions around payment options. But the key point for most people is:

• Quarterly updates are submissions of information.
• Your tax payment dates are a separate issue.

If you currently make Payments on Account, those rules still matter. An accountant can help you understand what you’ll owe, when, and whether your Payments on Account should be adjusted to avoid overpaying or underpaying.

When you might not need an accountant

To be fair, there are situations where you may be comfortable without ongoing accountancy support. For example:

• you have one simple income source,
• very few expenses,
• you’re confident with bookkeeping and software,
• you keep up-to-date monthly (not just quarterly), and
• you’re happy to read HMRC guidance and keep yourself informed.

Even then, many people choose a middle ground: doing their own bookkeeping, but having an accountant review quarterly or at year-end to ensure the final position is correct.

When having an accountant is strongly recommended

In our experience at Tax Digital, you’ll usually benefit from an accountant if any of the following apply:

• your income is close to a threshold and you’re unsure when you’ll be mandated into MTD,
• you have both self-employed and property income,
• your income is seasonal or irregular (cashflow planning matters),
• you have a vehicle and claim mileage or costs with private use,
• you work from home and want to claim correctly,
• you’re unsure about what counts as an allowable expense,
• you’ve had letters from HMRC before, or you feel anxious about compliance.

MTD increases the number of deadlines. If you’re already busy, the risk is not just mistakes — it’s missed submissions.

What about limited companies?

This article is mainly about MTD for ITSA (self-employed people and landlords). If you operate through a limited company, it’s important to separate a few things:

• MTD for Corporation Tax is not mandated for April 2026 (many expect it to be later, often discussed as 2028+).
• However, there is a significant change: as of March 2026, companies must use commercial software to file CT600s. In other words, HMRC’s free online filing for Corporation Tax is being withdrawn.

So even if Corporation Tax isn’t yet under MTD rules in 2026, the direction of travel is the same: digital filing via software, with less room for “manual” processes.

A simple way to think about it: software records, accountant advises

MTD software is excellent at capturing and transmitting information. Accountants are valuable for:

• interpreting the rules,
• checking the numbers make sense,
• correcting treatment where needed, and
• planning ahead so tax is manageable.

That’s why, even in a fully digital system, many people still choose to have an accountant in their corner.

How Tax Digital supports clients under MTD for ITSA

We’re MTD specialists, and we’re also qualified accountants. In practice, that means we help you with both sides of the job:

• MTD readiness: choosing software, setting up, training, and building a routine you can stick to.
• Ongoing compliance: keeping records tidy, handling quarterly submissions, and supporting you if something changes.
• Year-end finalisation: EOPS and final declaration, with a focus on accuracy and claiming the right reliefs.
• Tax planning: helping you understand what you should set aside and how to avoid nasty surprises.

If you prefer to do your own bookkeeping, that’s fine. If you’d rather hand it over, that’s also fine. The key is having a process that keeps you compliant and calm.

Practical next steps (especially if you’re in the 2026 group)

If your qualifying income is likely to be above £50,000, April 2026 will come around quickly. Here are sensible next steps:

1. Work out whether you’re in scope (and when) based on your gross self-employed and property income.
2. Get your records in order: separate business banking if possible, and build a habit of capturing receipts.
3. Choose software early so you’re not rushing at the last minute.
4. Decide your support level: DIY, review-only, or fully managed.

MTD is much easier when you start early and keep things simple.

Key takeaways

• MTD for ITSA is being rolled out from April 2026 based on income thresholds (£50k, £30k, £20k).
• Digital reporting doesn’t remove the need to understand tax rules — it increases the need for tidy, consistent records.
• Software helps with capturing and submitting data; accountants help with accuracy, judgement, planning, and staying compliant.
• If you’re unsure, a light-touch review service can be a sensible middle ground.

If you’d like, we can help you work out when MTD applies to you and what a realistic set-up looks like for your situation.