Making Tax Digital for Income Tax (MTD ITSA) is a new HMRC initiative to modernize how sole traders and landlords report their income and expenses. From 6 April 2026, some individuals with self-employment or property income above certain thresholds will be required to digitally use MTD ITSA to submit their tax information.
What Is Making Tax Digital for Income Tax?
MTD ITSA requires taxpayers or their agents to use compatible software to:
- Create and maintain digital records of income and expenses.
- Submit quarterly updates to HMRC
- File the annual tax return and pay any tax due by 31 January following the tax year
Who Needs to Sign Up and When?
Signing up is voluntary, allowing early adopters to test and prepare for the upcoming requirement. Eligibility is based on total annual income from self-employment and property. HMRC provides an online tool to check sign-up timing.
How Agents Can Help Clients Sign Up
Agents can register their clients for MTD ITSA, streamlining the process. To sign up, you’ll need the client’s:
- National Insurance number
- Business start date or property income start date (within the last two tax years)
- Accounting method (cash basis or traditional accounting)
- Business details (name, address, trade) if a sole trader
Who Can and Cannot Sign Up Voluntarily?
You can sign up voluntarily if you:
- Are UK resident with up-to-date personal details
- Have submitted at least one Self Assessment tax return
- Are current with your tax records
- Use a supported accounting period (6 April–5 April or 1 April–31 March)
You cannot sign up voluntarily if you:
- Have an active payment plan with HMRC
- Are in a partnership, bankrupt, or insolvent
- Claim specific allowances such as Married Couple’s or Blind Person’s Allowance
- Have income from trusts or shared lives schemes
- Use special averaging arrangements (common for farmers, writers, artists)
- Are signing up on someone else’s behalf without being an agent
Preparing to Sign Up
Before signing up, ensure you have compatible software confirmed by the provider. If clients have multiple income sources, each must be signed up separately.
Penalties and Deadlines
New penalty regimes will apply for late submissions or payments once MTD ITSA is mandatory. However, no penalties for missed quarterly updates will be used during the voluntary testing phase.
How to Sign Up
Agents need the client’s Self Assessment user ID and password. Additional identity verification may be required through HMRC’s online identity checks, which include photo ID verification via a mobile app or security questions.
Next Steps
Clients must still file a traditional Self Assessment tax return for tax years before starting MTD ITSA. Agents and clients can find further support on HMRC’s website or through their software providers.
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