Starting in April 2026, self-employed individuals and landlords in the UK will be required to submit quarterly income tax updates to HMRC under the new Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) rules.
If you are affected, you’ll need to keep digital records and submit summaries of your income and expenses every three months, a significant change from the current annual Self Assessment system.
Who Will Be Affected?
The new MTD rules will apply to you if:
- You are self-employed or a landlord
- Your total business and/or property income exceeds £50,000 per year (Those earning over £30,000 will be required to comply from April 2027).
What You’ll Need to Do
Instead of completing a single tax return each year, MTD for ITSA requires you to:
- Keep digital records of your income and expenses
- Submit quarterly updates to HMRC every three months
- Send a final declaration at the end of the tax year
This means you’ll need to maintain up-to-date records throughout the year, with more frequent reporting and a focus on accuracy.
How Accurate Do Your Records Need to Be?
HMRC expects your digital records to be accurate and up-to-date at all times.
- Every transaction (income or expense) must be recorded in your chosen accounting software
- Entries should be categorised correctly (e.g., rent received, utilities, travel expenses)
- Quarterly submissions should reflect the true state of your accounts, though allowances or reliefs can be applied when you submit your final declaration
In essence, while your records don’t need to be finalised each quarter, they must be correct and consistent. Using HMRC-approved software, like FreeAgent, helps minimise errors and ensures full compliance with MTD requirements.
What Reporting Does HMRC Expect?
Under MTD for ITSA, HMRC expects:
- Quarterly updates: Summaries of income and expenses every three months
- End of Period Statement (EOPS): Confirming that all quarterly submissions are complete and correct at year-end
- Final Declaration: Summarising all income sources (business, property, employment, savings, pensions) to calculate your final tax bill
These updates are not full tax returns, but they enable HMRC to estimate your ongoing tax position and keep track of your obligations throughout the year.
Looking for an Easier Way to Manage It All?
If you’re still relying on spreadsheets or manual records, now’s the ideal time to upgrade your system. FreeAgent could be the perfect solution.
If you already have a business account with NatWest, Royal Bank of Scotland, Mettle, or Ulster Bank NI, you’re entitled to FreeAgent at no extra cost – a powerful, fully HMRC-compliant accounting tool.
Why Consider FreeAgent?
Here’s why our clients are switching to FreeAgent:
- Automatic bank feeds: Transactions from your business account sync automatically.
- Quarterly tax estimates: Keep track of how much tax you owe throughout the year.
- Digital record-keeping: Fully compliant with MTD requirements.
- Direct submission to HMRC: File VAT and income tax updates directly from the platform.
- Real-time overview: View cashflow, expenses, and profit at a glance.
- Access anywhere: Use FreeAgent on both desktop and mobile.
As your trusted accountants, Plan A Financials helps make this transition seamless, keeping you compliant and ahead of deadlines.
Prepare Now and Don’t Wait Until 2026
The best way to avoid last-minute panic is to start embracing digital accounting today. Whether you’re already eligible for MTD or want to explore your options, we’re here to support you.
While other software providers are available, there are often additional costs. If you’re already a Plan A client, reach out to your account manager to discuss the best options for your business.
Speak to Plan A Financials Today
At Plan A Financials, we’re here to help self-employed professionals and landlords confidently navigate tax changes. Get in touch to discuss how MTD will affect your business and how we can assist you in preparing for this transition.
📞 Call us at: 01277 236 246
✉️ Email: info@plan-a.co.uk