When do I have to start using MTD ITSA?

From 6 April 2026 if your gross qualifying income (self-employment turnover plus property rental income) was above £50,000 in 2024/25. From April 2027 the threshold drops to £30,000. From April 2028 (planned) it drops to £20,000. The full rollout to all Self Assessment filers is intended but no firm date is set below £20,000.

What software do I need for MTD ITSA?

Any software on HMRC’s approved compatibility list at gov.uk. Options range from full bookkeeping packages (Xero, QuickBooks, FreeAgent, Sage) costing £10-£35/month, to bridging software for existing spreadsheet users (£0-£10/month), to specialist landlord-only packages. NatWest, RBS and Mettle business account holders get FreeAgent free.

How many tax returns will I file under MTD ITSA?

Four quarterly updates per business per tax year, plus one End of Period Statement (EOPS) per business per tax year, plus one annual Final Declaration. So a sole trader with one business files 6 submissions per year. A sole trader with both self-employment and rental income files 8 submissions (4 quarterly for each + 2 EOPS + 1 Final Declaration). Annual tax remains calculated once per year and paid under the same 31 January / 31 July deadlines.

Making Tax Digital for ITSA - UK 2026/27 rollout guide

Last reviewed by the UK Tax Drag editorial team · 12 May 2026 · How we review · Next review due 12 November 2026 · See what changed · Report an error

6-minute read

What you need to know: Making Tax Digital for ITSA - 2026/27 rollout

Quick answer: MTD ITSA mandatory from April 2026 for self-employed and landlords with combined annual income above £50,000 . Threshold drops to £30,000 from April 2027 , and is planned to drop to £20,000 from April 2028 . Affected taxpayers must: keep digital records in HMRC-compatible software; submit quarterly updates (5 Jul, 5 Oct,…

Key points:

You are a UK sole trader, partner in a partnership, OR you receive UK property income
Your gross qualifying income (turnover plus property rents combined, not profit) was above £50,000 in the 2024/25 tax year
You will continue to have qualifying income in 2026/27

MTD ITSA mandatory from April 2026 for self-employed and landlords with combined annual income above £50,000. Threshold drops to £30,000 from April 2027, and is planned to drop to £20,000 from April 2028. Affected taxpayers must: keep digital records in HMRC-compatible software; submit quarterly updates (5 Jul, 5 Oct, 5 Jan, 5 Apr); file an End of Period Statement (EOPS) per business; and the annual Final Declaration by 31 January as before. Bridging software (e.g. Excel + connector) is permitted.

The phased rollout timeline

April 2024 - April 2026Voluntary pilotHMRC ran a private beta with selected taxpayers and software vendors. Numbers limited; no penalties for participants.

April 2026Mandatory for £50,000+ incomeSelf-employed individuals and landlords with combined annual income above £50,000 (gross, not profit) must register, keep digital records and submit quarterly updates from this date.

April 2027Threshold drops to £30,000The mandatory threshold reduces to bring in an estimated additional 750,000 small self-employed and landlords.

April 2028 (planned)Threshold drops to £20,000Further phase-in pending HMRC review of capacity and digital readiness.

April 2030+ (eventual)Possible full rolloutThe government’s long-term plan extends MTD ITSA to all Self Assessment filers, but no firm date has been set below £20,000.

Who is affected from April 2026

You must register for MTD ITSA from 6 April 2026 if:

You are a UK sole trader, partner in a partnership, OR you receive UK property income
Your gross qualifying income (turnover plus property rents combined, not profit) was above £50,000 in the 2024/25 tax year
You will continue to have qualifying income in 2026/27

Combined income matters: a landlord with £30,000 of rental income who also earns £25,000 from freelancing is at £55,000 combined and falls within scope.

Exemptions from MTD ITSASome taxpayers are exempt: those in receipt of Marriage Allowance only (no business income); ministers of religion in some cases; foster carers; those for whom digital is impractical (age, disability, location with no internet). Exemption is applied for at gov.uk/government/publications/exemption-from-making-tax-digital.

The four quarterly submission dates

Quarter	Period covered	Submission deadline
Q1	6 April - 5 July	5 August
Q2	6 July - 5 October	5 November
Q3	6 October - 5 January	5 February
Q4	6 January - 5 April	5 May
End of Period Statement (EOPS)	Annual	31 January after year-end
Final Declaration	Annual	31 January after year-end

Quarterly updates show running totals of income and expenses by category. Tax is still calculated annually - quarterly submissions do not create quarterly tax liabilities. Payments on Account continue under the existing 31 January and 31 July dates.

Compatible software - the practical reality

HMRC publishes a list of MTD ITSA-compatible software at gov.uk/find-software-compatible-with-MTD-ITSA. As of May 2026, options fall into three categories:

Full bookkeeping packages: QuickBooks Self-Employed, Xero, Sage Business Cloud Accounting, FreeAgent (free with NatWest/RBS/Mettle business accounts), Coconut. Typically £10-£35/month.
Bridging software: connects existing Excel or Google Sheets records to HMRC’s API. Examples: Hammock, 123 Sheets, BTC Bridger. Cheaper (£0-£10/month) but less integrated.
Specialist landlord-only: Hammock (free tier), Landlord Vision, Rentila for property-focused users.

Free or near-free options for budget-conscious filersNatWest, RBS and Mettle business account holders get FreeAgent free (worth £348/yr). Hammock has a free landlord tier. Bridging software starts at £0-£5/month if you already maintain Excel records. Don’t overpay for features you don’t use.

Penalties under MTD ITSA

The penalty regime is new and "points-based":

Late submission points (rolling 24 months)	Result
1 missed quarterly update	1 point
2 points	1 point added
3 points	1 point added
4 points	£200 penalty + 1 point
Further misses while at 4 points	£200 each, indefinitely until cleared

Points expire after 24 months of compliance. The threshold for quarterly returns is 4 points (annual returns: 2 points). This is materially less aggressive than the old £100-per-month SA penalty regime but enforcement is automated.

What changes for the typical UK self-employed person

Mei, freelance graphic designer, £55,000 turnover

Before MTD ITSA (pre-April 2026):

One annual tax return by 31 January
Records: an Excel spreadsheet or paper book
Submission: gov.uk Self Assessment online portal
Software cost: £0

After MTD ITSA (April 2026 onwards):

FOUR quarterly digital submissions plus annual EOPS plus Final Declaration
Records: maintained in MTD-compatible software (e.g. FreeAgent free with bank, or Xero £25/month)
Submission: via software direct to HMRC API, no portal login
Annual time cost: similar overall (more frequent but smaller chunks) once routine established
Software cost: £0-£420/year

Action plan for affected filers in 2025-2026

Step 1: Confirm whether you are in scopeAdd up your 2024/25 turnover from self-employment + gross rental income. If £50,000+ combined, you are in for April 2026.

Step 2: Choose your software in 2025Trial MTD-compatible packages before the April 2026 mandatory date. Bookkeepers and accountants can recommend; major bank business accounts often include free or discounted access.

Step 3: Move records digital before April 2026If still on paper or pure spreadsheet, convert. Practising 6+ months before the deadline reduces stress when penalties kick in.

Step 4: Register for MTD ITSA at gov.ukRegister via the Government Gateway. Some software providers handle this for you.

Step 5: Submit Q1 in August 2026First mandatory quarterly update covers April-July 2026 and is due by 5 August. Treat this as a low-stakes test - submission deadlines aren’t penalised until repeat misses.

Calculate your sole trader tax bill

The sole trader tax calculator models income tax, Class 4 NI and Payments on Account under MTD ITSA - quarterly updates do not change the underlying tax calculation.

Open the sole trader calculator

Sources and references

MTD ITSA rollout details from gov.uk Making Tax Digital collection. Compatible software list at gov.uk MTD software. Penalty regime from gov.uk MTD penalties.

UK Tax Drag is educational and not regulated financial, tax, legal or business advice - see the disclaimer for the full position. Always verify current rates and rules at the original government sources before acting.

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