| Overview |
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC's programme to modernise how self-employed individuals and landlords report their income. Under MTD for ITSA, affected taxpayers must keep digital records and submit quarterly updates to HMRC, replacing the traditional once-a-year Self Assessment tax return for their trading and property income.
BrightTax supports MTD for ITSA, including the MTD Qualifying Income Report to help you identify which clients are affected and from when.
| Who Does MTD for ITSA Affect? |
MTD for ITSA applies to individuals who have qualifying income above the relevant threshold. Qualifying income is the combined total of:
- Self-employment income (sole trader income)
- UK property income (rental income)
- Foreign property income
| ⚠ Important: Employment income, dividends, savings interest, and pension income do not count towards the MTD qualifying income threshold. Only self-employment and property income are included. |
| MTD for ITSA Thresholds and Timelines |
| Qualifying Income | Mandatory From | Status |
|---|---|---|
| £50,000 or more | 6 April 2026 | Mandatory now |
| £30,000 or more | 6 April 2027 | Mandatory from April 2027 |
| £20,000 or more | 6 April 2028 | Subject to confirmation |
| Below £20,000 | Not yet confirmed | Voluntary only at present |
| ✔ Tip: The threshold applies to the tax year's qualifying income, not just one source. A client with £25,000 self-employment income and £10,000 rental income has £35,000 qualifying income and will be mandated from April 2027. |
| What MTD for ITSA Requires |
Once a client is within MTD for ITSA, they must:
| Requirement | Detail |
|---|---|
| Digital record keeping | Income and expenses must be recorded in MTD-compatible software — spreadsheets are acceptable if bridging software is used |
| Quarterly updates | Submit a summary of income and expenses to HMRC four times per year — one per quarter |
| End of Period Statement (EOPS) | An annual statement confirming the figures for each source of income |
| Final Declaration | Replaces the traditional Self Assessment return — submitted after the tax year end to confirm all income and claim reliefs |
| ⚠ Important: The quarterly updates are summaries of income and expenses — they are not tax return submissions. Tax is not calculated or paid at the quarterly stage. The Final Declaration at the year end is where the tax liability is confirmed. |
| What MTD for ITSA Does Not Change |
- Clients below the qualifying income threshold continue to file a standard Self Assessment return as normal.
- The tax payment dates (31 January and 31 July) remain the same under MTD for ITSA.
- Non-qualifying income sources (employment, dividends, savings) are still reported on the Final Declaration, not via quarterly updates.
| MTD for ITSA and BrightTax |
BrightTax supports MTD for ITSA workflows. The MTD Qualifying Income Report helps you identify which clients are affected and plan ahead. Full quarterly submission functionality is available within BrightTax for mandated clients.
| Frequently Asked Questions |
Q: Does MTD for ITSA replace Self Assessment entirely?
A: Not entirely. The quarterly updates replace the traditional annual return for trading and property income, but clients still need to submit a Final Declaration at the year end which covers all income sources including employment, dividends, and savings.
Q: What if a client's income fluctuates above and below the threshold from year to year?
A: The threshold is assessed each tax year. If a client's qualifying income drops below the threshold in a later year, they may be able to exit MTD for ITSA. HMRC guidance on threshold fluctuation should be checked — the rules are subject to change.
Q: Are partnerships affected by MTD for ITSA?
A: Partners report their share of partnership income on their own Individual Tax Return. Where a partner's total qualifying income (including their partnership share) exceeds the threshold, they will be subject to MTD for ITSA individually.
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