Question 1

What is Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)?

Accepted Answer

MTD for ITSA is a new government initiative requiring sole traders and landlords with a qualifying income to keep digital records and submit tax updates to HMRC quarterly using compatible software, replacing the traditional annual tax return.

Question 2

When does MTD for Self Assessment start?

Accepted Answer

For individuals with a total business and/or property income above £50,000, MTD for ITSA becomes mandatory from April 2026. For those with income between £30,000 and £50,000, it starts in April 2027.

Question 3

Do I need to use special software for MTD?

Accepted Answer

Yes, you must use "MTD-compatible software" recognized by HMRC. This software allows you to keep digital records and send updates directly to HMRC. Traditional spreadsheets alone are not sufficient unless linked via bridging software.

Question 4

What happens if I miss a quarterly update deadline?

Accepted Answer

HMRC is introducing a points-based penalty system. Late submissions will incur penalty points, and reaching a certain threshold will result in a financial fine. It is crucial to stay on top of your quarterly deadlines.

Question 5

Does MTD apply to landlords as well as sole traders?

Accepted Answer

Yes, MTD for ITSA applies to both self-employed sole traders and landlords who meet the income threshold. The income threshold is based on your *total* gross income from self-employment and property combined.

Question 6

Will I still need to file a Self Assessment tax return?

Accepted Answer

Under MTD, the traditional annual tax return is replaced by the "Final Declaration." This confirms your business income and allows you to add other income sources (like savings interest or dividends) to finalize your tax position for the year.

Question 7

Can I sign up for MTD voluntarily before the deadline?

Accepted Answer

Yes, you can voluntarily sign up for MTD for ITSA now. Early adoption allows you to get used to the new digital processes and software before it becomes a legal requirement, avoiding a last-minute rush.

Question 8

What records do I need to keep digitally?

Accepted Answer

You must keep digital records of all business income and expenses. This includes the date, amount, and category of each transaction. You should also retain digital copies of invoices and receipts where possible.

Question 9

How much will MTD-compatible software cost?

Accepted Answer

Costs vary depending on the software provider and the complexity of your needs. Some providers offer free basic versions, while comprehensive packages (like Xero or QuickBooks) have monthly subscription fees. We can advise on the most cost-effective solution for you.

Question 10

Can Mayfair Tax Advisors help me set up MTD?

Accepted Answer

Absolutely. We offer a full MTD transition service, including software selection, setup, training, and ongoing support for your quarterly submissions. We ensure you are fully compliant and confident with the new system.

Question 11

Is MTD different for Limited Companies?

Accepted Answer

Yes. MTD for VAT is already mandatory for most VAT-registered businesses. MTD for Corporation Tax is planned for the future but does not yet have a confirmed start date. The current changes specifically affect Income Tax for individuals.

Making Tax Digital (MTD)
for Self Assessment

What is MTD for ITSA?

Quarterly Updates

End of Period Statement (EOPS)

Final Declaration

Key Deadlines

Transition with Confidence

Software Setup

Digital Record Keeping

Quarterly Submissions

Read Our Guide

Frequently Asked Questions

Private Consultation

Making Tax Digital (MTD) for Self Assessment