Making Tax Digital for Income Tax

We are always banging the drum for digital accounting and all the positives it can bring to your business. We’ve also explained the regulatory requirements along the way, so you can ensure you are prepared and confident when the latest HMRC changes come into force. 

Recently, we highlighted how the changes would impact small businesses and in this latest article we look at the changes for self-employed individuals and what you need to be prepared for in the coming months and years.

Extension of Making Tax Digital for Income Tax Self-Assessment to Businesses and Landlords

HMRC are introducing a new way for self-employed and individuals receiving property income over £10,000. This is called Making Tax Digital for Income Tax (or MTD ITSA). 

This new legislation comes into force in April 2026 for some individuals, after a push back from the original proposed date of April 2024, but there is an option to sign up early to help test the scheme and ensure you are confident in how it works ahead of its implementation.

The aim of this latest MTD update is to bring income reporting into the digital age and to compliment the use of digital banking, cloud accounting software, and online record keeping.

Mandatory MTD Requirements for Income Tax Reporting:

The criteria for those self-employed individuals and landlords to sign up for April 2026 changes are:

• You are an individual (as opposed to a LTD company or other organisation).
• You are registered for Self-Assessment.
• You were self-employed or collecting property income before April 2025.
• You have a qualifying income of over £50,000.

If you fit the above criteria you will need to sign up for MTD ITSA, and you’ll need to have qualifying software for reporting ready for April 2026. 

At Whyfield, we will be working with our clients to help them understand the new requirements and support them through this transition as we have done with our clients for MTD (Making Tax Digital) for VAT.

Benefits of Making Tax Digital for Income Tax (MTD ITSA)

• Enhanced financial visibility for you and your income, meaning you can make informed decisions and have control. 
• Knowing your tax liabilities on a more regular basis will enable better cashflow management and planning. 
• Utilising online banking and digital apps will streamline the reporting process and remove administrative tasks.

Challenges and Concerns for Self-Employed:

• Change will often bring uncertainty but we are confident that you will embrace the latest MTD changes and you’ll be ready way before the implantation. If you’re not sure about your Making Tax Digital journey, please reach out to our team.

Preparing for MTD ITSA Compliance

• Check if you meet the criteria for the next legislative changes.
• Sign up your business or authorise your agent to act on your behalf.
• Choose an eligible software.
• Use the next 2 years to understand the requirements and how to use the software. 
• Keep digital records.
• When April 2026 arrives, start submitting quarterly updates through your software. 
• Finalise your income at the end of the year.

MTD ITSA will be here before we know it. We want to empower you to understand what the changes mean for you and help guide you through a digital tax revolution, and over the next two years, we want you to be ready for the implementation of the new mandatory requirements.

Unsure of what the changes mean for you? 

Get in touch with us to chat about it.