Making Tax Digital (MTD)
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) a key part of the UK government’s strategy to modernise the tax system. For some key information regarding your potential obligations, timelines, and the new penalty regime that comes with non-compliance.
Who Will Be Affected?
From April 2026, MTD for ITSA will apply to individuals with:
- Qualifying Income over £50,000 from self-employment and/or property.
- Applicable to sole traders, landlords, and some other unincorporated businesses.
From April 2027, the threshold will extend to qualifying income over £30,000 and potentially £20,000 from April 2028
What you’ll Need to do
Under MTD, you’ll be required to:
- Maintain Digital Records – Income and expenses must be recorded digitally using HMRC-approved software.
- Submit Quarterly Updates– A summary of income and expenses must be filed every 3 months.
- Submit an End of Period Statement (EOPS)– This year-end submission confirms final adjustments and claims.
- Submit a Final Declaration -A final return summarising all income sources, similar to the current Self Assessment.
New Penalty Regime – What You Need to Know
A points-based penalty system will apply to MTD for ITSA filings. This means:
- Each obligation type (e.g. quarterly returns) is tracked separately
- Late submissions (quarterly updates, EOPS or final declarations) will result in penalty points
- Once you reach a points threshold (typically 4 points), a £200 fixed financial penalty will apply
- Points expire after a period of compliance
- Each obligation type (e.g. quarterly returns) is tracked separately
How Gray + Press Can Support You
We are here to assist your transition to MTD. Depending on how you want to manage your own compliance our support can include all or some of the follow:
- Assist in determining if you are within the regime.
- Performing a readiness review to highlight areas that need attention before MTD becomes mandatory.
- Plan for when it is likely to be relevant to manage cashflow.
- Helping you select and implement HMRC-compliant digital software.
- Managing quarterly submissions and year-end reporting on your behalf.
- Offering training and tailored support for clients managing their own records.
Next Steps
Get in touch touch below if you would like us to assist you with MTD and we can confirm the scope and what the relevant fee would be. Note what you file on your April 2025 Tax return could impact your MTD obligations.
Note the above information is general, not exhaustive, and not specific to your circumstances therefore Gray + Press Accountants Limited do not accept any liability for any reliance placed on this information.
