Key facts
- MTD for ITSA is mandatory from 6 April 2026 for self-employed and landlords with qualifying income over £50,000.
- From 6 April 2027, the threshold drops to qualifying income over £30,000.
- You must submit four quarterly updates of income and expenses to HMRC, plus a final declaration.
- The final declaration replaces the traditional Self Assessment tax return (SA100).
- You must use MTD-compatible software — the HMRC online portal cannot be used for MTD ITSA submissions.
Overview of MTD for Income Tax
Making Tax Digital for Income Tax Self Assessment (ITSA) is the next major phase of HMRC’s MTD programme. It changes how self-employed individuals and landlords report their income to HMRC — moving from a single annual Self Assessment tax return to quarterly digital updates throughout the year, followed by a final declaration.[1]
The aim is to give taxpayers a clearer, more up-to-date picture of their tax position and reduce the errors that come from trying to reconstruct a full year’s figures at the last minute. HMRC-recognised tools such as GoFile’s MTD Income Tax software handle both the quarterly updates and the final declaration.
Who Must Comply?
MTD for ITSA applies to individuals with qualifying income from self-employment and/or property:[1]
| Phase | Start Date | Qualifying Income Threshold |
|---|---|---|
| Phase 1 | 6 April 2026 | Over £50,000 gross |
| Phase 2 | 6 April 2027 | Over £30,000 gross |
| Phase 3 | To be confirmed | Below £30,000 |
Qualifying income = gross income from self-employment + gross property income, before expenses. If you earn £35,000 from your sole trade and £20,000 from a rental property, your qualifying income is £55,000 — above the Phase 1 threshold.
For a full breakdown of who is in scope, see Who MTD Affects.
How MTD for ITSA Works
Under MTD for Income Tax, the annual cycle works as follows:[2]
| Step | What You Do | When |
|---|---|---|
| 1. Keep digital records | Record all business income and expenses in MTD-compatible software throughout the year. | Ongoing |
| 2. Submit quarterly updates | Send a summary of income and expenses to HMRC for each quarter. | Four times a year (see deadlines below) |
| 3. Submit final declaration | Confirm your total income, claim reliefs, and finalise your tax position for the year. | By 31 January after the end of the tax year |
| 4. Pay your tax | Pay any tax owed based on the final declaration. | By 31 January (with possible payments on account) |
Quarterly Update Periods
The standard quarterly periods follow the tax year:[2]
| Quarter | Period | Deadline |
|---|---|---|
| Q1 | 6 April – 5 July | 5 September |
| Q2 | 6 July – 5 October | 5 December |
| Q3 | 6 October – 5 January | 5 March |
| Q4 | 6 January – 5 April | 5 June |
Each quarterly update is due by the 5th of the second month after the quarter ends. You can also elect to use calendar quarters (1 Apr–30 Jun, 1 Jul–30 Sep, 1 Oct–31 Dec, 1 Jan–31 Mar) if that suits your business better.
For a detailed guide to what quarterly updates contain, see Quarterly Updates Explained.
The Final Declaration
After your four quarterly updates, you submit a final declaration by 31 January following the end of the tax year. This replaces the traditional Self Assessment tax return and is where you:[2]
- Confirm the income and expenses from your quarterly updates
- Report any other income (e.g. employment, dividends, capital gains)
- Claim tax reliefs and deductions (e.g. personal allowance, pension contributions)
- Finalise your tax liability for the year
For full details, see The Final Declaration.
Digital Record-Keeping Requirements
Under MTD for ITSA, you must keep the following records digitally:[2]
- The amount of each transaction
- The date of each transaction
- The category of income or expense (e.g. sales income, travel costs, rent received)
You do not need to photograph every receipt, but you must maintain a digital record of your transactions that can produce the figures needed for your quarterly updates and final declaration.
Tip: Start recording your income and expenses digitally now, even before MTD becomes mandatory. This builds good habits and means you already have clean records when the first quarterly update is due. GoFile makes it easy — try it free.
Penalties Under MTD for ITSA
The existing Self Assessment penalty regime applies to MTD for ITSA submissions. Late quarterly updates and late final declarations may attract penalties under the new points-based penalty system:[1]
- Each late submission earns a penalty point
- Once you reach the penalty threshold (currently 4 points for quarterly obligations), a £200 penalty is charged for each subsequent late submission
- Late payment penalties and interest also apply to overdue tax
For more on penalties, see Penalties & Interest in our Income Tax section.
MTD ITSA vs Traditional Self Assessment
| Feature | Self Assessment | MTD for ITSA |
|---|---|---|
| Frequency | Once a year | Quarterly updates + annual final declaration |
| Submission method | HMRC online or paper | MTD-compatible software only |
| Record-keeping | Paper or digital | Must be digital |
| Tax visibility | After year end | Ongoing, updated quarterly |
| Filing deadline | 31 January | Quarterly deadlines + 31 January final |
Frequently Asked Questions
What is MTD for ITSA?
MTD for ITSA (Making Tax Digital for Income Tax Self Assessment) is the requirement for self-employed individuals and landlords to keep digital records of their income and expenses and submit them to HMRC quarterly using MTD-compatible software, followed by a final declaration at the end of the tax year.
Do I still need to file a Self Assessment tax return under MTD?
The traditional SA100 tax return is replaced by the final declaration, which you submit through your MTD software. If you have other income not covered by MTD (e.g. capital gains), you may still need to report it through the final declaration process.
What counts as qualifying income?
Qualifying income is your gross income from self-employment and/or property, before deducting expenses, losses, or capital allowances. If you have both sources, add them together.
Can I join MTD for ITSA voluntarily?
Yes. HMRC runs a voluntary pilot for MTD ITSA. You can sign up to test the system before the mandate date, which helps you prepare. Check GOV.UK for the latest pilot eligibility criteria.
Further Reading
- Quarterly Updates Explained — what to include and when to submit
- The Final Declaration — how the replacement for SA works
- Who MTD Affects — check if you are in scope
- Choosing MTD-Compatible Software — find the right tool
- Self Assessment Basics — the existing system MTD replaces
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