How to Sign Up for Making Tax Digital for Income Tax (MTD ITSA)

Introduction to Making Tax Digital for Income Tax Self Assessment

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) represents a fundamental shift in how sole traders and landlords report their income and expenses to HMRC. This initiative aims to modernise the tax system by making it more efficient, more effective, and easier for taxpayers to get their tax right. Instead of a single annual tax return, MTD ITSA requires businesses and landlords to keep digital records and send quarterly updates of their income and expenses to HMRC directly from MTD-compatible software.

With the mandatory deadline of April 2026 fast approaching for those with qualifying income over £50,000, understanding the sign-up process is critical. This comprehensive guide will walk you through every step, from checking your eligibility to authorising your chosen MTD software, ensuring you are fully prepared to meet your MTD ITSA obligations and avoid potential penalties. Preparation is key to a smooth transition, and AccountsOS is here to support you in every aspect of MTD compliance.

What is Making Tax Digital for Income Tax Self Assessment (MTD ITSA)?

MTD ITSA is a government initiative designed to transform the UK tax system, making it one of the most digitally advanced in the world. Its core principle is to require businesses and landlords to maintain digital records of their income and expenses and to submit this information to HMRC quarterly, directly from MTD-compatible software. This moves away from the traditional annual Self Assessment tax return as the sole submission method.

The primary goals of MTD ITSA are to:

• Reduce Errors: Digital record keeping and direct software submissions are intended to minimise common mistakes often made manually.
• Increase Efficiency: Automating data transfer between software and HMRC is expected to streamline the process for both taxpayers and the tax authority.
• Improve Taxpayer Understanding: Quarterly updates provide a more up-to-date view of tax liability, allowing businesses and landlords to better manage their finances and budget for tax payments.
• Modernise the Tax System: Aligning the UK with other leading digital economies and harnessing technology for tax administration.

Under MTD ITSA, instead of a single Self Assessment tax return, you will submit:

• Quarterly Updates: Summaries of your business or property income and expenses every three months.
• End of Period Statement (EOPS): An annual declaration confirming your final taxable profit or loss for each business or property.
• Final Declaration: A single, annual declaration that brings together all your income sources, including those not subject to MTD ITSA, and allows for any final adjustments or claims for reliefs and allowances.

Key Difference from Traditional Self Assessment: The primary difference is the frequency and method of reporting. MTD ITSA requires digital record keeping and regular, direct submissions from software, replacing the annual paper or online form for income and expenses for affected businesses and landlords.

Who Needs to Sign Up for MTD ITSA? (Eligibility Criteria)

Making Tax Digital for Income Tax Self Assessment is being rolled out in phases, based on the level of qualifying income. It primarily affects sole traders and landlords.

Qualifying Income Thresholds and Dates:

Qualifying income	Mandatory from	Details
£50,000 or more	April 2026	Mandatory for sole traders and landlords with qualifying income.
£30,000 or more	April 2027	Mandatory for sole traders and landlords with qualifying income.

Qualifying income includes gross income from:

• One or more sole-trader businesses.
• Income from UK property.
• Income from overseas property.

It is important to note that the threshold applies to your gross income (before expenses) from these sources, not your profit. If you have both sole trader and property income, these amounts are combined to determine if you meet the threshold.

Specific Business Types:

• Sole Traders: If you operate as a self-employed individual and your gross income from your business activities exceeds the relevant threshold, you will need to sign up for MTD ITSA.
• Landlords: If you receive income from renting out property in the UK or overseas, and your gross rental income (or combined with sole trader income) exceeds the threshold, you will be mandated for MTD ITSA. This applies whether you own one property or multiple.
• Partnerships: Currently, MTD ITSA is not mandatory for general partnerships. HMRC has indicated that MTD for partnerships will be introduced at a later date, but specific timelines are yet to be confirmed. However, individual partners may still be mandated for their sole trader or property income if they meet the thresholds.
• Limited Companies: Limited companies are subject to Corporation Tax and are not currently part of MTD ITSA. They will eventually fall under a separate MTD for Corporation Tax regime, which is also in development.

Check Your Income: You should use your income from the 2024/25 tax year to determine if you meet the £50,000 threshold for the April 2026 mandate. For the April 2027 mandate, you would look at your 2025/26 tax year income. This gives you time to prepare.

When is the Deadline to Sign Up for MTD ITSA?

The deadlines for signing up for MTD ITSA are directly linked to your qualifying income and the start date of the mandate. It is not a single, fixed date for everyone, but rather a phased approach.

Key Dates to Remember:

• April 2026: This is the mandatory start date for sole traders and landlords with gross qualifying income of £50,000 or more for the tax year 2024/25. You must be signed up and ready to submit quarterly updates for your first MTD period starting on or after this date.
• April 2027: This is the mandatory start date for sole traders and landlords with gross qualifying income of £30,000 or more for the tax year 2025/26. You will need to be signed up and compliant for your first MTD period starting on or after this date.

The actual date you need to begin sending quarterly updates will depend on your business's accounting period. For example, if your accounting period aligns with the tax year (6 April to 5 April), your first MTD quarterly update for the 2026/27 tax year would cover the period from 6 April 2026 to 5 July 2026, with a submission deadline of 5 August 2026.

Do Not Delay: While the deadlines seem distant, the process of choosing software, setting up digital record keeping, and understanding the new reporting requirements takes time. HMRC recommends signing up well in advance of your mandatory start date to ensure a smooth transition.

Step-by-Step: How to Sign Up for MTD for Income Tax

The MTD ITSA sign-up process involves several crucial steps, from initial eligibility checks to authorising your chosen software. Follow this detailed guide to ensure a compliant and hassle-free registration.

1. Check Eligibility and Income Thresholds
2. Obtain/Confirm Government Gateway ID, UTR, and NI Number
3. Choose and Implement MTD-Compatible Software
4. Sign Up for MTD for ITSA via GOV.UK
5. Authorise Your MTD Software with HMRC
6. Begin Digital Record Keeping and Quarterly Updates

Step 1: Check Your Eligibility and Income Thresholds

Before proceeding, confirm that you are indeed required to sign up for MTD ITSA. This involves checking your gross income from all sole trader businesses and UK/overseas property income.

• For April 2026 mandate: Review your total gross qualifying income for the tax year 2024/25 (6 April 2024 to 5 April 2025). If it was £50,000 or more, you will need to sign up.
• For April 2027 mandate: Review your total gross qualifying income for the tax year 2025/26 (6 April 2025 to 5 April 2026). If it was £30,000 or more, you will need to sign up.

Remember, this is gross income, not profit, and it combines all relevant business and property income. If your income is consistently below these thresholds, you are not currently mandated for MTD ITSA, though you can choose to sign up voluntarily.

Step 2: Gather Your Essential Information and Prepare

To sign up for MTD ITSA, you will need specific identifiers and to have made initial preparations for digital record keeping.

Government Gateway User ID and Password

You will need your Government Gateway user ID and password. This is the same ID you use to access your personal tax account or other HMRC online services. If you do not have one, or have forgotten your details, you can create one or recover your details on the GOV.UK website. It is crucial that this ID is linked to your Self Assessment records.

Unique Taxpayer Reference (UTR)

Your 10-digit UTR is unique to you and is used by HMRC to identify your tax records. You can find your UTR on previous tax returns, notices to file a tax return, or other HMRC correspondence. If you cannot find it, you can request it from HMRC, but this may take time.

National Insurance Number (NI Number)

Your NI number is also required as part of the sign-up process. This is typically found on payslips, P60s, or official letters from HMRC or the Department for Work and Pensions (DWP).

Choose MTD-Compatible Software

A fundamental requirement of MTD ITSA is the use of MTD-compatible software to keep digital records and submit updates. HMRC does not provide its own MTD software, so you must choose a commercial product. AccountsOS is fully MTD-compatible and designed to simplify this process. Research and select software that meets your needs before you sign up, as you will need to authorise it soon after.

Step 3: Sign Up for MTD for ITSA via GOV.UK

Once you have all your details ready and have chosen your software, you can proceed to sign up on the HMRC website.

1. Visit the GOV.UK Website: Navigate to the specific HMRC page for signing up for MTD for Income Tax. Search for "sign up for MTD for Income Tax" to find the correct portal.
2. Log in with Government Gateway: You will be prompted to log in using your Government Gateway user ID and password. Ensure you use the ID associated with your Self Assessment.
3. Confirm Your Details: HMRC will verify your identity using your UTR and National Insurance number. You may be asked to confirm other personal or business details.
4. Confirm Your Business Type: You will need to confirm if you are a sole trader, landlord, or both. If you have multiple businesses, you will register them under your single MTD ITSA account.
5. Agree to Terms: You will be asked to agree to the terms and conditions of MTD for Income Tax. Read these carefully.
6. Confirmation: Once complete, HMRC will confirm your successful registration for MTD ITSA. This confirmation usually arrives via your Government Gateway account or by post. Keep this confirmation for your records.

It is important to complete this step yourself, even if you use an accountant. While your accountant can assist you, the actual sign-up must be initiated by the individual or business owner.

Step 4: Authorise Your MTD Software with HMRC

After signing up with HMRC, the next critical step is to authorise your chosen MTD-compatible software to communicate with HMRC on your behalf. This creates the 'digital link' required for MTD submissions.

1. Log in to Your MTD Software: Open your MTD-compatible software (e.g., AccountsOS) and navigate to the MTD or HMRC connection section.
2. Initiate HMRC Authorisation: The software will have an option to "Connect to HMRC" or "Authorise MTD". Click this to begin the process.
3. Redirect to GOV.UK: You will be securely redirected to the GOV.UK website. Here, you will again log in with your Government Gateway user ID and password. This is HMRC's way of verifying that you are consenting to the software accessing your tax information.
4. Grant Permission: HMRC will ask you to confirm that you give permission for your chosen software to interact with your MTD ITSA account. Review the permissions requested and grant access.
5. Return to Software: After successful authorisation on GOV.UK, you will be automatically redirected back to your MTD software. The software should now confirm that it is connected to HMRC.

This authorisation typically lasts for 18 months, after which you will need to re-authorise your software. AccountsOS will remind you when re-authorisation is due, ensuring continuous compliance. Without this authorisation, your software cannot send your digital updates to HMRC, leading to non-compliance.

Step 5: Start Keeping Digital Records and Making Quarterly Updates

With your software authorised, you are now ready to fully embrace MTD ITSA.

Digital Record Keeping

You must now maintain digital records of all your business and/or property income and expenses. This means:

• Recording all transactions electronically in your MTD-compatible software.
• Ensuring that the software can capture and store the necessary details for each transaction, such as date, amount, category, and a description.
• If you use spreadsheets, they must be linked digitally to your MTD software, meaning data is transferred automatically without manual re-entry.

Quarterly Updates

Your MTD software will help you prepare and submit quarterly summaries of your income and expenses to HMRC. These updates are not tax returns themselves, but rather provide HMRC with a regular snapshot of your financial activity. You will submit four quarterly updates per tax year, with specific deadlines following the end of each quarter. AccountsOS simplifies this process by collating your digital records and guiding you through the submission.

Choosing Compatible MTD Software

The success of your MTD ITSA compliance hinges on selecting the right MTD-compatible software. HMRC maintains a list of software providers, and it is essential to choose a product that is officially recognised. AccountsOS is one such provider, offering a robust and user-friendly solution.

Key Features to Look For in MTD Software:

• HMRC Recognition: Ensure the software is listed as MTD-compatible for Income Tax Self Assessment on GOV.UK.
• Digital Record Keeping: It must allow you to digitally record all your income and expenses, ideally with features like receipt scanning and bank feed integration to automate data entry.
• Quarterly Update Submission: The software should be capable of generating and submitting the required quarterly summaries directly to HMRC via a secure digital link.
• End of Period Statement (EOPS) & Final Declaration Support: While the software primarily handles quarterly updates, it should also support the annual EOPS and provide the necessary figures for your Final Declaration.
• Multiple Income Sources: If you have both sole trader and property income, ensure the software can handle and combine these different income streams for MTD purposes.
• Usability and Support: Look for intuitive interfaces, clear reporting, and reliable customer support to assist you with any queries.
• Security: Data security is paramount. Ensure the software uses robust encryption and adheres to data protection regulations.
• Cloud-Based: Cloud-based software offers flexibility, allowing you to access your records from anywhere at any time, and ensures automatic updates and backups.

How AccountsOS Supports Your MTD ITSA Compliance:

AccountsOS is designed from the ground up to help sole traders and landlords meet their MTD ITSA obligations with ease. Our platform provides:

• Intuitive Interface: Easily navigate and manage your income and expenses, even if you are new to digital accounting.
• Automated Bank Feeds: Connect your bank accounts for automatic import and categorisation of transactions, significantly reducing manual data entry.
• Expense Management: Capture receipts digitally, categorise expenses accurately, and ensure you claim all eligible deductions.
• MTD-Compliant Submissions: Generate and submit your quarterly updates directly to HMRC with just a few clicks, ensuring you meet all deadlines.
• Comprehensive Reporting: Gain real-time insights into your financial performance, helping you make informed decisions and budget for tax.
• Dedicated Support: Our support team is available to assist you with any questions about MTD ITSA and using AccountsOS.

By choosing AccountsOS, you gain a powerful ally in navigating the complexities of MTD ITSA, transforming a potential burden into a streamlined, efficient process.

What Happens After I Sign Up for MTD ITSA? (Ongoing Compliance)

Signing up for MTD ITSA is the first step. The ongoing process involves regular digital record keeping and submitting information to HMRC throughout the tax year. This replaces the traditional annual Self Assessment tax return for your business and property income.

Quarterly Updates

The core of MTD ITSA is the requirement to send a summary of your business or property income and expenses to HMRC every three months. These are known as 'quarterly updates' or 'quarterly submissions'.

• Frequency: You will submit four quarterly updates per tax year. The quarters typically align with:
  • 6 April to 5 July (deadline 5 August)
  • 6 July to 5 October (deadline 5 November)
  • 6 October to 5 January (deadline 5 February)
  • 6 January to 5 April (deadline 5 May)
• Content: Each update will contain a summary of your total income and total expenses for that three-month period. You do not need to send detailed breakdowns of every transaction, but rather categorised totals.
• Digital Link: These updates must be submitted directly from your MTD-compatible software to HMRC's system via a secure digital link. Manual input into a web form is not permitted for these submissions.
• Adjustments: If you realise an error in a previous quarterly update, you can make an adjustment in a subsequent update.

These quarterly updates provide HMRC with a more frequent view of your financial activity, helping to make tax calculations more current and potentially reducing errors at year-end. They also allow you to see your estimated tax liability developing throughout the year, aiding in financial planning.

End of Period Statement (EOPS)

After your fourth quarterly update, you will need to prepare and submit an End of Period Statement (EOPS) for each business or property income source.

• Purpose: The EOPS allows you to finalise your taxable profit or loss for the year for a specific business or property. This is where you can apply any accounting adjustments, such as capital allowances or accruals and prepayments, that were not included in the quarterly cash-basis summaries.
• Deadline: The EOPS must be submitted by 31 January following the tax year. For example, for the tax year ending 5 April 2027, the EOPS deadline would be 31 January 2028.
• Submission: Like quarterly updates, the EOPS is submitted directly from your MTD-compatible software to HMRC.

The EOPS is crucial for converting your quarterly cash-basis summaries into a final, accurate figure for your taxable profit or loss for each income stream.

Final Declaration

The Final Declaration is the equivalent of the traditional Self Assessment tax return, but it builds upon your MTD submissions.

• Consolidated View: This declaration brings together all your MTD ITSA business and property income, any other sources of income (e.g., employment income, dividends, interest), and allows for any reliefs or allowances that apply across your total income.
• Final Tax Calculation: HMRC uses this to calculate your total income tax and National Insurance contributions for the tax year.
• Deadline: The Final Declaration must also be submitted by 31 January following the tax year.
• Payment: Any tax due will be payable by 31 January (for the previous tax year) and 31 July (for payments on account) as per the existing Self Assessment payment schedule.

This structured approach ensures that your tax affairs are managed digitally and more frequently, providing greater transparency and potentially fewer surprises at year-end. AccountsOS streamlines the preparation of all these submissions, guiding you through each stage of the MTD ITSA compliance cycle.

Exemptions from MTD ITSA

While MTD ITSA is becoming mandatory for many sole traders and landlords, certain individuals may be exempt from the requirements. It is important to understand these exemptions and how to apply for them if you believe you qualify.

Who Might Be Exempt?

• Digital Exclusion: Individuals who cannot reasonably use digital tools to keep records or make MTD submissions due to age, disability, remoteness of location, or any other reason. This is a high bar and requires demonstrating that it is "not reasonably practicable" for you to comply.
• Religious Belief: Those whose religious beliefs prevent them from using electronic communications. Similar to digital exclusion, this exemption is strictly applied.
• Insolvency: Individuals who are subject to insolvency procedures, such as bankruptcy, may be temporarily or permanently exempt.
• Foreign Income Only: If your only income requiring Self Assessment is from overseas and falls below a certain threshold, you might be exempt, but this is less common for those with UK property or sole trader income.

How to Apply for an Exemption

If you believe you meet the criteria for an exemption, you must contact HMRC directly to apply.

1. Contact HMRC: You will need to call the HMRC Self Assessment helpline or write to them, explaining your reasons for seeking an exemption.
2. Provide Evidence: Be prepared to provide evidence or detailed explanations to support your claim for exemption. For example, if claiming digital exclusion due to age or disability, you might need to explain how this impacts your ability to use a computer or smartphone for tax purposes.
3. HMRC Review: HMRC will review your application and inform you of their decision. It is important to note that HMRC will assess each case individually and will only grant exemptions where there is a genuine and compelling reason for non-compliance.

It is crucial not to assume you are exempt. Continue to prepare for MTD ITSA until you receive official confirmation from HMRC that your exemption has been granted. Failure to do so could result in penalties. If your circumstances change, and you become able to comply, you will then be expected to join MTD ITSA.

Penalties for Non-Compliance with MTD ITSA

HMRC is introducing a new penalty regime for MTD ITSA, which is distinct from the existing Self Assessment penalty system. This new system is points-based for late submissions and includes separate penalties for other forms of non-compliance. Understanding these can help you avoid unnecessary fines.

Points-Based Penalty System for Late Submissions:

For each missed quarterly update or End of Period Statement, you will receive a point. Once you accumulate a certain number of points, a financial penalty will be issued.

• Sole Traders/Landlords submitting annually: A penalty of £200 is issued once 2 points are accumulated.
• Sole Traders/Landlords submitting quarterly: A penalty of £200 is issued once 4 points are accumulated.
• Each subsequent late submission after reaching the penalty threshold will incur an additional £200 penalty.
• Points expire after 24 months of continuous compliance (i.e., making all submissions on time).

Other Penalties for MTD ITSA Non-Compliance:

Scenario	Penalty
Late Quarterly Update	Points-based system, leading to fines after multiple missed deadlines.
Failure to Keep Digital Records	Up to £300 for initial failure, plus daily penalties for continued non-compliance.
Inaccurate Submissions	Penalties from £0 to 100% of the additional tax due, depending on the cause of the error.
Late Payment of Tax	Interest charged on unpaid tax, plus potential surcharges.

Late Payment Penalties and Interest:

The MTD ITSA regime does not change the deadlines for paying your tax. However, if you pay your tax late, you will still incur existing late payment penalties and interest charges.

• Late Payment Penalties:
  • 1st penalty: 2% of the tax unpaid after 30 days.
  • 2nd penalty: 2% of the tax unpaid after 6 months.
  • 3rd penalty: 2% of the tax unpaid after 12 months.
• Interest: HMRC charges interest on all unpaid tax from the day it becomes due until it is paid in full. The interest rate is the Bank of England base rate plus 2.5%.

Preventing Penalties: The best way to avoid MTD ITSA penalties is to sign up on time, use MTD-compatible software for digital record keeping, submit all quarterly updates and statements by their deadlines, and ensure the accuracy of your submissions. AccountsOS helps you stay organised and on track.

Worked Examples: MTD ITSA Sign-Up Scenarios

To illustrate how MTD ITSA applies in practice, let's consider two common scenarios for sole traders and landlords.

Example 1: Sole Trader Meeting the £50,000 Threshold

Scenario: Sarah runs a successful freelance graphic design business as a sole trader. For the tax year 2024/25, her gross income was £65,000. She also has a small amount of bank interest income, but no rental properties.

MTD ITSA Implications:

• Eligibility: Sarah's gross sole trader income of £65,000 exceeds the £50,000 threshold for the 2024/25 tax year.
• Mandatory Start Date: She will be mandated for MTD ITSA from April 2026.
• Action Required:
  1. By early 2026, Sarah needs to ensure she has her Government Gateway ID, UTR, and NI number confirmed.
  2. She must choose an MTD-compatible software, such as AccountsOS, and start keeping digital records of her business income and expenses.
  3. She needs to sign up for MTD ITSA via GOV.UK.
  4. After signing up, she must authorise AccountsOS to connect with HMRC.
  5. From April 2026, she will begin submitting quarterly updates of her business income and expenses directly from AccountsOS to HMRC.
  6. She will then submit an End of Period Statement for her business and a Final Declaration by 31 January 2028 for the 2026/27 tax year.

Sarah's bank interest income will be included in her annual Final Declaration, but not in her quarterly MTD ITSA updates.

Example 2: Landlord with Rental Income over £50,000

Scenario: David owns two rental properties. For the tax year 2024/25, his combined gross rental income from both properties was £55,000. He is also employed and has PAYE income, but no sole trader business.

MTD ITSA Implications:

• Eligibility: David's combined gross property income of £55,000 exceeds the £50,000 threshold for the 2024/25 tax year.
• Mandatory Start Date: He will be mandated for MTD ITSA from April 2026.
• Action Required:
  1. David needs to ensure he has his Government Gateway ID, UTR, and NI number.
  2. He must select MTD-compatible property management software or general accounting software like AccountsOS to record his rental income and expenses digitally.
  3. He needs to sign up for MTD ITSA via GOV.UK, indicating he has property income.
  4. He must then authorise his chosen software to link with HMRC.
  5. From April 2026, he will submit quarterly updates of his combined property income and expenses.
  6. He will also submit an End of Period Statement for his property income and a Final Declaration by 31 January 2028 for the 2026/27 tax year.

David's PAYE employment income will be included in his annual Final Declaration, but it does not count towards the MTD ITSA threshold and is not part of the quarterly updates.

How AccountsOS Helps You Comply with MTD ITSA

AccountsOS is built to simplify Making Tax Digital for Income Tax Self Assessment, making compliance straightforward and stress-free for sole traders and landlords.

Streamlined Digital Record Keeping

Easily categorise income and expenses, attach receipts, and maintain accurate digital records in one place, ready for MTD submissions.

Automated Quarterly Updates

Generate and submit your quarterly income and expense summaries directly to HMRC from AccountsOS, ensuring compliance with MTD requirements.

Real-time Income & Expense Tracking

Monitor your financial position throughout the year, helping you forecast tax liabilities and manage your business finances proactively.

Support for Multiple Income Sources

Manage income and expenses for all your sole trader businesses and rental properties within AccountsOS, simplifying combined MTD submissions.

Seamless End of Period Statement

AccountsOS helps compile the necessary data for your End of Period Statement (EOPS) and Final Declaration, ensuring accuracy and saving time.

Secure HMRC Authorisation

Connect AccountsOS to HMRC securely through the official API, allowing for compliant and direct submission of your MTD data.

Conclusion

Making Tax Digital for Income Tax Self Assessment is a significant change, but with proper preparation, it can be a manageable transition. The April 2026 deadline for those with income over £50,000 is rapidly approaching, making early action essential. By understanding the eligibility criteria, gathering the necessary information, and following the step-by-step sign-up process, you can ensure you meet your MTD ITSA obligations.

Choosing the right MTD-compatible software, such as AccountsOS, is paramount. It will not only facilitate your digital record keeping and quarterly submissions but also provide you with a clearer, real-time view of your financial position. Don't wait until the last minute; start your MTD ITSA journey today to ensure a smooth, compliant, and penalty-free experience.

Frequently asked questions

Do I need to sign up if my accountant handles my taxes?

Yes, you must still personally sign up for MTD for ITSA. Your accountant will then need to be authorised by you to submit your MTD updates using compatible software. The responsibility for signing up rests with the individual or business owner.

Can I use spreadsheets for MTD ITSA?

You can use spreadsheets for initial record keeping, but they must be digitally linked to MTD-compatible software that can then submit the information to HMRC. Spreadsheets alone are not sufficient; a digital link is mandatory for submissions.

Will MTD mean I pay more tax?

MTD ITSA changes how you report your income and expenses, not the underlying tax rules. Your tax liability should not increase solely due to MTD, though better record keeping might reveal previously missed deductions or lead to more accurate reporting.

Is MTD ITSA the same as MTD for VAT?

While both are part of the Making Tax Digital initiative, MTD for ITSA applies to Income Tax Self Assessment for sole traders and landlords, whereas MTD for VAT applies to VAT-registered businesses. They have separate requirements, deadlines, and digital submission processes.

What if my income falls below the threshold after signing up?

Once you have signed up for MTD for ITSA, you generally remain in the scheme, even if your income subsequently drops below the threshold. HMRC's current guidance indicates that once mandated, you continue to comply unless specifically exempted.

Do I need to buy new software?

Yes, you will need MTD-compatible software to keep digital records and submit updates to HMRC. Many providers offer solutions, including AccountsOS, which simplifies the process and integrates with HMRC's MTD systems.

Can I sign up before my mandatory start date?

Yes, you can voluntarily sign up for MTD for ITSA and start submitting quarterly updates early. This can be a good way to familiarise yourself with the process and ensure your digital record keeping is robust before it becomes mandatory.

What if I have multiple income sources?

If your combined qualifying income from all sole trader businesses and property income exceeds the threshold, you will need to sign up for MTD for ITSA. Your MTD software should be able to handle multiple income streams and combine them for your End of Period Statement and Final Declaration.

Related guides

• AccountsOS MTD Features
• HMRC MTD Guidance
• Digital Record Keeping Guide