HMRC are changing how you need to submit tax returns, with new Making Tax Digital for Income Self-Assessment (MTD for ITSA) coming in from 6 April 2026. Coming with this are new requirements that you will need to follow, and it best to start planning for them now!
We have included the important areas to consider below to make the planning as easy as possible and to make sure you are ready for the deadline.
The Basics
The new requirements are not as scary as it may sound, in fact they are rather simple. In essence the only new additions to the process are:
- Being required to keep accurate and up to date digital records
- Submitting quarterly updates to HMRC
- Submit an annual end of period statement
You will still be required to submit your annual tax return and make any tax payments as usual alongside the above. The good news is that these regulations only effect self-employed businesses or landlords with an annual income of £50,000 initially. However, it would be a good idea to comply with the new rules even if you are below this turnover to make sure you are ready for the future.
Moving to a Digital Tax Process
HMRC’s aim with MTD is to move the entire tax process to a digital system, doing away with the paper forms. However, for this to work everyone needs to work together and be coordinated.
This does mean that there are a few key points you need to be aware of and to action to get in place before the deadline.
- Choosing software for your record keeping. Keeping digital records all starts with choosing the right software that is compatible with MTD ITSA. while an excel spreadsheet would have worked for traditional bookkeeping in the past this will not meet the requirements for MTD ITSA. cloud based software like Xero, Sage and QuickBooks will help meet these requirements. With the ability to directly import bank statements and smoothly deal with transactions it can even make the process quicker and easier.
- Dealing with recording your income and expenditure. A big aim of going digital is to provide real time information on your business and tax liability, but to make this effective you will need to keep your records up to date. You will need to consider how you are going to enter invoices, reconcile the bank account and what time you will be set aside to keep your records up to date. This may sound like a lot of additional admin time each week, but by streamlining the process it avoids the usual end of year rush and will make the whole process much smoother.
- Who is going to be dealing with your quarterly and annual updates? The responsibility to meet the MTD ITSA requirements will fall to you, but this does not mean you need to do everything yourself. Why not get your accountant to help with the quarterly and yearly updates? Save yourself the time so you can put more into your business. You can always submit the updates yourself, but you will get a more accurate review and analysis of your business by working with your accountant.
- Making the most of working with your accountant. HMRC likes to tell you it is easy to deal with your own tax, but this is not always the case. Working out taxable profits and making any adjustments to your tax return are not always the simplest process. So why not make the most of your accountant’s professional knowledge and expertise, working more closely with your accountant and reduce the stress involved in the whole process.
The new MTD for ITSA is not all about compliance though, going digital and keeping up to date records will help you run a more effective and flexible business.
If you would like any advice on getting ready for the 6 April 2026 deadline for MTD for ITSA, or any assistance in getting set up, please contact us and we will help make the process as smooth as possible.
