The way you report your income to HMRC is changing and it is one of the biggest shifts to the UK tax system in decades.
Making Tax Digital for Income Tax Self Assessment MTD for ITSA replaces the traditional once a year tax return with a more regular digital process. While this may seem like a significant change at first, with the right support it can make managing your finances clearer and more up to date.
At BM and Co Accountants we are here to guide you through the transition with clarity and confidence.
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Who Needs to Read This?
This article is for you if:
- Self-employed individuals (sole traders)
- Landlords with rental income
- Individuals currently on Self Assessment Clients likely to fall within MTD income thresholds
- Small business owners needing HMRC compliance update
What Is Making Tax Digital
Making Tax Digital is HMRC’s move toward a fully digital tax system. Instead of submitting a single annual Self Assessment return you will
Keep digital records of your income and expenses
Send quarterly updates to HMRC
Submit a final declaration at the end of the tax year
This approach is designed to improve accuracy reduce errors and help you stay informed about your tax position throughout the year.
When Does MTD Apply to You
MTD for Income Tax is being introduced in stages based on your total income from self employment and property
From 6 April 2026 for income over 50000 pounds
From 6 April 2027 for income over 30000 pounds
From 6 April 2028 for income over 20000 pounds
If your income exceeds these thresholds you will need to follow the new rules from the relevant date.
Example: If you’re a beautician who also earns rent from a spare room, declare service income under “self-employment” and rental income under the “UK property” section of your tax return.
How the Quarterly Process Works
Under MTD your tax reporting will follow a structured cycle
Digital Record Keeping
All income and expenses must be recorded using compatible software rather than manual methods alone.
Quarterly Updates
Every three months you will send a summary of your income and expenses to HMRC. These updates provide a year to date estimate of your tax position.
Final Declaration
By 31 January following the end of the tax year you will submit a final declaration to confirm your figures claim reliefs and finalise your tax liability.
Quarterly Deadlines to Remember
Your reporting periods and deadlines will usually be
- 6 April to 5 July with a submission deadline of 5 August
- 6 July to 5 October with a submission deadline of 5 November
- 6 October to 5 January with a submission deadline of 5 February
- 6 January to 5 April with a submission deadline of 5 May
Using appropriate software can make meeting these deadlines much more manageable.
6. Don’t Forget Capital Gains and Other Taxes
Selling a rental property? You may owe Capital Gains Tax (CGT) and you must report this within 60 days of the sale.
Running an Airbnb or renting rooms? You may need to consider:
- Furnished Holiday Let rules (if applicable)
- Rent-a-Room relief (up to £7,500/year tax-free)
Make sure you understand which tax rules apply to your situation.
Software Options
To comply with MTD you will need suitable accounting software such as Xero Sage or QuickBooks.
These tools can help you
- Track income and expenses automatically
- Connect securely to HMRC
- Submit updates efficiently
How BM and Co Accountants Can Help
We understand that changes to tax processes can feel uncertain. Our team is here to support you at every stage.
We can help you
Review whether MTD applies to you
Choose and set up the right software
Handle your quarterly submissions
Provide ongoing advice so you stay fully compliant
Our aim is to make the transition simple and well managed.
Get Ready Now
Even if MTD does not apply to you yet preparing in advance can make the process much smoother.
If you would like tailored advice or help getting started please contact BM and Co Accountants. We are here to support you with clear practical guidance.