Making Tax Digital

After several delays, the UK Government has confirmed that Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will begin its phased rollout from 6 April 2026. This marks a significant shift in how sole traders and landlords report their income to HMRC—and it’s more than just replacing the annual tax return.

If you’re self-employed or earn income from property, these changes will affect how you keep records, report earnings, and interact with HMRC. At AIM GB LTD, we’re here to guide you through every step.

What Is MTD ITSA?

MTD ITSA is part of HMRC’s digital transformation strategy. It requires affected taxpayers to:

• Keep digital records of income and expenses
• Submit quarterly updates to HMRC
• File a finalisation statement after the tax year ends

This system replaces the traditional Self Assessment Tax Return (SATR) for those within scope.

Who Is Affected and When?

MTD ITSA applies to sole traders and landlords with gross income (before expenses) above the following thresholds:

• £50,000 from 6 April 2026
• £30,000 from 6 April 2027
• £20,000 from 6 April 2028

Some individuals will be exempt, including those with complex circumstances or limited digital access.

Quarterly Reporting Explained

You’ll need to submit a report every three months. Each update includes cumulative totals of income and expenses for the tax year to date. This approach helps avoid the need to correct earlier submissions if errors are found later.

Quarterly deadlines:

• 7 August
• 7 November
• 7 February
• 7 May

Each report must include:

• Start and end dates of the reporting period
• Totals for income and expenses in HMRC’s categories

Finalisation Statement

After the tax year ends, you’ll submit a finalisation statement by 31 January, just like the current SATR deadline. This statement includes:

• Adjustments to quarterly figures
• Other sources of income (e.g. dividends, pensions)
• Claims for allowances and reliefs

From April 2026, HMRC’s free online SATR service will no longer be available for those within MTD ITSA—you’ll need to use commercial software.

Reporting Categories

Software Requirements

You’ll need MTD-compatible software that can:

• Create and store digital records
• Submit quarterly updates
• File the finalisation statement
• Receive tax estimates from HMRC

Popular options include QuickBooks, Xero, FreeAgent, and Sage. We help you choose and set up the right software for your business.

Payment of Tax

MTD ITSA does not change how tax is paid. You’ll still make:

• Two payments on account (31 January and 31 July)
• A balancing payment (31 January after the tax year)

Late Submission Penalties

HMRC’s new points-based penalty system applies under MTD:

• Each missed deadline earns a penalty point
• Reaching the threshold triggers a £200 fine
• Points expire after a period of compliance

Thresholds:

• 2 points for Income Tax
• 4 points for VAT

Avoiding penalties means submitting on time—even if you owe nothing.

Finally

MTD ITSA is a major change, but it doesn’t have to be a burden. With the right software and support, you can stay compliant, avoid penalties, and keep your business buzzing.

At AIM GB LTD, we are here to help sole traders and landlords transition smoothly to digital reporting. We offer setup, training, and ongoing support—plus we plant a tree for every new client.

Ready to prepare for MTD? Contact us today for a free consultation.