MTD for ITSA – ITSA Big Change for Sole Traders and Landlords

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is one of the biggest changes to the tax system in recent years. From April 2026, many sole traders and landlords will need to keep digital records and send quarterly updates to HMRC using approved software. Annual submissions will also change, replacing the current self assessment process.

In other words, no more handing over a bag of receipts to your accountant once a year!

Who will be affected?

MTD for ITSA applies to sole traders and landlords. It does not currently apply to partnerships or limited companies.

It’s important to be clear on what counts as a partnership. For example, if a husband and wife jointly own a rental property, this is not automatically treated as a partnership unless it has been formally registered with HMRC and partnership tax returns are filed. If you’re unsure, seek professional advice.

When will it start?

HMRC is phasing in MTD for ITSA over several years, based on turnover (sales), not profit:

From April 2026 – if turnover is £50,000 or more (based on the 2024/25 tax year).
From April 2027 – if turnover is £30,000 or more (based on the 2025/26 tax year).
From April 2028 – if turnover is £20,000 or more (based on the 2026/27 tax year).

Note: These dates are HMRC’s current plans and may be subject to change.

How will it work?

At the moment, self assessment tax returns can be filed online via HMRC or using specialist software. Under MTD for ITSA, this will change:

You’ll need to use MTD-compatible software (such as Xero, QuickBooks, FreeAgent, or similar).
You must send quarterly updates for each trade or property business.
At the end of the year, you’ll need to submit an End of Period Statement (EOPS) for each trade/property, and a single Final Declaration confirming your overall income and allowances.

If you run more than one business (for example, you’re both a sole trader and a landlord), you’ll need to make separate quarterly submissions for each. This means more reporting and potentially more software costs and time commitments.

How to prepare

The best time to prepare is now. Switching to digital record keeping and learning new software takes time. By getting ready early, you’ll avoid last minute stress and give yourself a smoother transition.

At JB Accounts, we can guide you through the whole process. From choosing the right software, to setting it up and keeping you compliant so you can focus on running your business.

Get in touch today and put yourself in pole position for go-live.

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