MTD for ITSA Explained for Sole Traders & Landlords
For UK Users Only:
Making Tax Digital for Income Tax Self Assessment, mercifully shortened to MTD for ITSA, is the next big tax change for many UK sole traders and landlords. From 6 April 2026, some people will need to keep digital records, use compatible software, and send quarterly updates to HMRC instead of relying on one big annual scramble.
It sounds a bit intimidating at first. But the basics are actually pretty straightforward once you strip away the tax jargon.
This guide explains what MTD for ITSA is, who it applies to first, what qualifying income means, how quarterly updates work, and how software like Joy Pilot can make the whole thing far easier to manage.
What is MTD for ITSA?
HMRC says Making Tax Digital for Income Tax is a new way for sole traders and landlords to report income and expenses to HMRC. If you’re in scope, you’ll need software that works with MTD for ITSA to create and store digital records, send quarterly updates, and submit your tax return.
So, in plain English: less paper, fewer year-end pile-ups, and more regular digital reporting.
Who needs to use MTD for ITSA from April 2026?
The first mandatory group is sole traders and landlords with qualifying income over £50,000 for the 2024 to 2025 tax year. They will need to start using MTD for ITSA from 6 April 2026.
After that, the rollout expands:
- those with qualifying income over £30,000 will be brought in from 6 April 2027
- the government has also set out plans to extend it to those with qualifying income over £20,000 by April 2028
What is qualifying income?
This is the bit that really matters.
HMRC says qualifying income is your gross income before expenses from:
- self-employment
- property income
So if you earn £27,000 from self-employment and £25,000 from rental income, your qualifying income is £52,000. It’s based on the top-line income, not your profit after costs.
Some income does not count towards qualifying income, such as employment income, dividends, pensions, and your share of profit from a partnership as an individual partner.
What do you need to do under MTD for ITSA?
If you’re in scope, there are three core requirements.
1. Keep digital records
You’ll need to keep digital records of your self-employment and property income and expenses using software that works with MTD for ITSA. HMRC says those records should include details such as the amount, date, and category.
2. Use compatible software
HMRC says you’ll need commercial software that can:
- create, store and correct digital records
- send quarterly updates
- submit your tax return by 31 January after the end of the tax year
3. Send quarterly updates
You’ll need to send HMRC a quarterly summary of income and expenses for each self-employment and property business using compatible software. These updates are pulled from your digital records.
How do quarterly updates work?
Quarterly updates are not full tax returns. They are periodic summaries sent to HMRC every three months. HMRC says you do not need to make accounting or tax adjustments before sending them.
That means the quarterly update is more of a regular check-in than a full year-end calculation.
HMRC also explains that quarterly updates are cumulative, so later updates include records created since the start of the tax year as well as any corrections made since earlier submissions.
What are the MTD for ITSA quarterly deadlines?
Under the standard update periods, the deadlines are:
- period ending 5 July → due 7 August
- period ending 5 October → due 7 November
- period ending 5 January → due 7 February
- period ending 5 April → due 7 May
HMRC also allows calendar update periods in some cases, which can make life simpler if your accounting works better on monthly dates.
What about penalties and the first-year easement?
If you’re required to use MTD for ITSA from 6 April 2026, HMRC says it will not apply penalty points for late quarterly updates during the 2026 to 2027 tax year. That gives newly mandated users a bit of breathing room while they settle into the new reporting rhythm. But it’s not a free pass: late tax return penalties can still apply, and once the easement ends, missed deadlines can build up penalty points and lead to £200 penalties. You’ll also still need to submit your quarterly updates before you can file your tax return.
Does MTD for ITSA mean four tax bills a year?
No. HMRC says MTD for ITSA does not change the way you pay tax or the dates payments are due.
That’s an important myth to kill off early. You may be reporting more often, but that does not automatically mean paying tax four times a year.
How Joy Pilot helps
This is where software stops being “nice to have” and starts being your future sanity.
MTD for ITSA works best when your records are already tidy, digital and up to date. Joy Pilot helps you stay on top of income and expenses as you go, so quarterly updates feel like a quick routine task rather than a fresh round of admin chaos.
With the right setup, you can:
- keep digital records little and often
- organise income and expenses clearly
- stay ready for quarterly deadlines
- avoid the classic year-end scramble
- make MTD feel manageable instead of dramatic
Because really, the easiest way to deal with quarterly updates is to avoid turning them into a quarterly panic.
Final takeaway
From 6 April 2026, sole traders and landlords with qualifying income over £50,000 will need to follow MTD for ITSA rules. That means keeping digital records, using compatible software, and sending quarterly updates to HMRC. Qualifying income means your gross income before expenses from self-employment and property.
It’s a change, yes. But with the right software and a better reporting rhythm, it’s a very manageable one.
Want to get ready for MTD for ITSA without the spreadsheet circus? Joy Pilot helps sole traders and landlords keep digital records, stay on top of deadlines, and make quarterly reporting far less painful. Try us, the first month is free!