MTD for Income Tax (ITSA): the 2026 mandate explained
From 6 April 2026, sole traders and landlords with qualifying income above the first threshold band must keep digital records and submit quarterly updates to HMRC. This guide explains the phased rollout, what qualifying income actually means, what you submit each year, who is exempt, and what to do before the mandate starts. It notes that MTD ITSA rules and dates can change and that you should verify your position with HMRC or a qualified UK accountant.
Phased rollout
HMRC is bringing MTD for Income Tax in over three phases by qualifying income band. The first starts on 6 April 2026 and is scoped by your 2024/25 Self Assessment return. The second starts on 6 April 2027, scoped by the 2025/26 return. The third starts on 6 April 2028, scoped by the 2026/27 return, each phase bringing in a lower band of qualifying income.
Limited companies and limited liability partnerships are not in scope of MTD ITSA at all. General partnerships will be brought in at a later date, with the timeline still to be confirmed by HMRC.
What counts as qualifying income
This is the single biggest source of confusion. Qualifying income is gross turnover, not profit. Even if your accounts barely break even you can still be in scope.
It counts gross self-employment turnover, gross UK property rental income and gross overseas property rental income. It does not count employment income taxed under PAYE, pension income, savings interest, dividends, capital gains, or partnership income until partnerships join MTD.
The page gives a worked example: someone running a sole trade and also letting property adds the gross trading turnover to the gross rent on the same return, and it is the combined figure that is tested against the threshold for the phase.
What you submit each year
Four quarterly updates per income source, so a separate set for a self-employment business and for each property business, plus a single annual Final Declaration that replaces the current Self Assessment return. The previously planned End of Period Statement was removed by HMRC in the Small Business Review outcome of 22 November 2023.
The standard quarterly periods run 6 April to 5 July, 6 July to 5 October, 6 October to 5 January and 6 January to 5 April, with updates due by the seventh of the second month after each quarter ends: 7 August, 7 November, 7 February and 7 May. The Final Declaration is due on 31 January following the end of the tax year.
Exemptions
Automatic exemptions apply to non-UK residents trading in the UK, the foreign businesses of non-UK domiciled individuals, personal representatives of a deceased person, trustees, and individuals without a National Insurance number.
Beyond those, a digital exclusion exemption can be applied for from HMRC on grounds of age, disability, religion or location.
What to do now
Check your scope by looking at the relevant Self Assessment return for your phase: gross trading plus gross property income is what is tested. Pick MTD-compatible software, noting that spreadsheets still work if combined with bridging software that connects to the HMRC API.
Move your bookkeeping digital before April 2026, because you need a full quarter of trading data captured digitally to make the first submission of 2026/27 straightforward. And consider signing up for HMRC's voluntary pilot, which is open now and lets you submit for 2025/26 ahead of the mandate so the transition is already familiar.
How Taxmo helps
The page states that Taxmo records income and expenses digitally, generates each quarter's update from that data, and submits quarterly updates and the Final Declaration to HMRC once Taxmo is HMRC-recognised for ITSA filing.
For accountants, the practice dashboard tracks the quarterly status of every linked client across the practice in one view.
Common questions
What is MTD for Income Tax (ITSA)?
Making Tax Digital for Income Tax Self Assessment is HMRC's reform replacing the annual Self Assessment return for sole traders and landlords with quarterly digital updates plus an annual Final Declaration. From 6 April 2026 onwards, individuals in scope must keep digital records and submit through HMRC-recognised software rather than filing once a year.
What counts as qualifying income for MTD ITSA?
Qualifying income is gross trading turnover plus gross property income, before expenses. It is turnover, not profit, so you can be in scope even if you make only a small profit or none at all. Employment income under PAYE, pensions, savings interest, dividends, capital gains and partnership income are all excluded from the calculation.
Do partnerships have to comply?
Not in the first phase. General partnerships will be brought into MTD ITSA at a later date, and HMRC has not yet confirmed the timeline. Limited liability partnerships and limited companies are not in scope of MTD ITSA at all.
Are there exemptions from MTD for Income Tax?
Yes. Automatic exemptions apply to non-UK residents trading in the UK, the foreign businesses of non-UK domiciled individuals, personal representatives of deceased persons, trustees, and individuals without a National Insurance number. Beyond those, you can apply to HMRC for a digital exclusion exemption on grounds of age, disability, religion or location.
What do I have to submit and when?
Four quarterly updates for each income source, so separate sets for a self-employment business and each property business, plus one annual Final Declaration that replaces the Self Assessment return. Standard quarters end 5 July, 5 October, 5 January and 5 April, with updates due 7 August, 7 November, 7 February and 7 May respectively. The Final Declaration is due on 31 January following the end of the tax year. The previously planned End of Period Statement was removed by HMRC on 22 November 2023.
Do I need new software for MTD ITSA?
Yes, you must use HMRC-recognised MTD-compatible software to submit quarterly updates. Spreadsheets are still allowed, but only when combined with bridging software that connects to the HMRC API. Moving your bookkeeping into software before April 2026 is worthwhile, because the first quarterly update needs a full quarter of digitally captured trading data.