MTD ITSA is coming in April 2026

At Clever Accounts we're ready and compliant to provide an end-to-end solution for self-employed businesses and landlords who are caught by the new HMRC MTD for Income Tax changes.

Workwell Accountancy - Making Tax Digital for Income Tax - Your overview

What Does MTD IT Mean For You?

MTD for Income Tax introduces a mandatory requirement for millions of self-employed individuals and landlords to keep digital records and submit returns quarterly.

1. Keeping Digital Records

If you are mandated under MTD IT, all of your sole trade and property records must be kept digitally using MTD-compatible software, like FreeAgent. And it will be your responsibility to register each trade with HMRC for MTD IT.

2. Quarterly Updates

You must submit a summary of your income and expenses to HMRC every three months in line with the Tax year, for example the first quarter will cover income and expenses between 6th April to 5th July and needs to be filed by 7th August.

3. End-of-Year Submission

Instead of submitting a Tax Return at the end of the year, you will need to submit an end of year submission via the MTD IT compliant software. This replaces your current Self Assessment tax return but is still due by the 31 January after the reporting period.

When does this apply to you?

Your mandation date (the date you need comply with MTD IT) is determined by your gross qualifying income (combined income from self-employment and property, before deducting expenses). This income threshold is based on your most recently submitted Tax Return.

DEADLINE:

From April 2026

£50,000 or more

Qualifying income from self-employment and/or property.

DEADLINE:

From April 2027

£30,000 or more

Qualifying income from self-employment and/or property.

DEADLINE:

From April 2028

£20,000 or more

Qualifying income from self-employment and/or property.

Common Questions

What happens if I miss a Quarterly Update?

  • HMRC is introducing a new points-based penalty system, similar to the MTD for VAT penalty system.
  • You accrue 1 penalty point for each missed submission (Quarterly Update or End-of-Period Statement).
  • A £200 penalty is charged only once you reach 4 points..
  • To reset the penalty points you must file on time for 12 months and the last 24 months of returns must be filed.

Can I still use a spreadsheet for my records?

  • Yes, a spreadsheet can still be used as a digital record-keeping tool.
  • However, MTD rules require data to be sent directly to HMRC-compatible software via a digital link (often bridging software).
  • You are not allowed to manually copy, paste, or retype data from the spreadsheet into the MTD software or submission.
  • We would recommend using FreeAgent than alternative bridging software.

What if my income falls below the threshold?

Once you meet the eligibility criteria and are mandated into MTD IT, you must continue to comply for at least 12 months. After this initial period, you can voluntarily leave MTD if your qualifying income drops below the mandation threshold for three consecutive years.

Considering Your Next Step?
The Limited Company Option

Switching to a Limited Company structure can potentially reduce the administrative burden of MTD IT, but requires careful consideration.

Sole Traders (Trading)

For typical Sole Traders running a business, the move to a Limited Company is often straightforward to execute today, helping you bypass MTD IT quarterly reporting obligations.

Property Landlords

For Buy-to-Let Landlords, the transition is more complex and involves careful consideration of capital gains and stamp duty land tax. This requires bespoke professional advice.

Call Us for Bespoke MTD Planning

Get in touch today for a comprehensive review of your situation and to determine if a Limited Company structure is the most efficient choice for you.

Call: 0113 518 8800

Clever MTD ITSA solutions

We're experts in accounting services. This makes us first choice for any MTD ITSA questions you may have. Through our 20 year experience of supporting businesses, we've built up a huge amount of experience in ensuring all businesses are fully compliant and that no additional requirements by HMRC should mean additional hassle, or effort for you.

Using a combination of providing an all-inclusive accounting service and help with navigating around MTD ITSA, the experienced accountants at Clever, are always on hand for you.

This, together with the easy-to-use FreeAgent accountancy software, makes our small business accounting service stand out from the rest.

Compare our services

  • Get compliant, accurate advice on upcoming HMRC changes relating to MTD ITSA and how this might affect you and your business.

  • Providing MTD ITSA ready and compliant software to help you ensure your submissions are quick and easy.

  • No matter what business sector you work in, our accountants have a vast array of knowledge and experience to ensure your business is fully informed.

How to prepare for MTD ITSA

Get in touch

Check whether your business might be affected by MTD. If it is, get in touch with us for further information on what changes you might need to make to ensure your business is compliant.

Advice and support

All businesses will need to start using MTD-compliant accounting software to submit quarterly submissions. We can recommend and help get you set up on the best software for you..

Clever MTD

When April 2024 comes, our services will seamlessly include the required support in order for your business to submit their quarterly submissions and ensure you are fully compliant.

Join today and start the switch

Our clients trust us as their accounting partner

Our unique accounting service for contractors offers end-to-end IR35 support, contract reviews & assessments, and seamless switching between limited company and Umbrella contract roles for one single monthly fee.

Great partnerships complement your business

We've worked hard to find the best partnerships to help you and your business. We're not just accountants, but business advisors. We want you to succeed and ensuring you have access to the best tools will only help develop a stronger business.

Tide Banking

Our banking partner, Tide is a perfect fit for your sole trader business. A modern, online banking solution that offers a 5-minute turnaround for account registration with hassle-free, easy to use software, provides a great starter companion. What's more, once you have registered and funded your new bank, they'll award you £75 cashback!

Learn more about Tide
If you would like to know more about Clever Accounts, please contact us on 0113 518 8800
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