Making Tax Digital- MTD for ITSA start date is approaching

If you are a self employed trader or landlord whose combined gross business and trading income in 2024/25 is £50,000 or more you will need to comply with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) from 6 April 2026. This will mean that you will need to use software that is compatible with MTD for ITSA to keep digital records and make quarterly returns of income and expenses. You will also need to file a final declaration, rather than a Self Assessment tax return, to finalise your tax position for the tax year.

It is important that you are ready to meet your obligations from April 2026.

We can help you find suitable software and help you meet your compliance obligations.

MTD penalties

A new points based penalty regime applies under Making Tax Digital (MTD). The regime, which was introduced for MTD for VAT from 1 January 2023 levies a penalty point each time a return is filed late. A penalty of £200 is charged once the points threshold is reached. The points threshold depends on the return frequency, and is set at two points for annual returns, such as the final declaration, and at four points for quarterly returns, such as the quarterly update. Once a threshold has been reached, the points total is reset to zero as long as you have met your compliance obligations and made all the submissions that were due in the previous 24 months.

Late payment penalties are harsher under the new regime however, as long as you pay what you owe within 15 days of the due date, you will not be charged a late payment penalty, although interest will apply if you pay late.

If you are joining MTD for ITSA from April 2026, we can help you understand the new penalty regime.