From 6 April 2026, MTD for Income Tax Self-Assessment (ITSA) will become mandatory for self-employed individuals and landlords with a combined gross income exceeding £50,000 in the 2024/25 tax year. We will be providing this service via Xero and QuickBooks, so if you fall into this category, do get in touch for a complimentary consult.

 In essence, the key requirements for MTD are:

1. Digital Record Keeping. Taxpayers must use HMRC-approved software to digitally record all business income and expenses. This includes maintaining records of the amount, category, and date of each transaction. Spreadsheets will not be accepted.

2. Quarterly Updates. Instead of submitting an annual Self Assessment tax return, taxpayers will need to provide quarterly updates to HMRC, detailing income and expenses for each quarter. It does not require things like prepayments, accruals or depreciation.

3. End-of-Year Declaration. At the end of the tax year, a final declaration will be submitted, consolidating the quarterly updates and confirming the total tax liability.

Additionally, come 6 April 2027, MTD for ITSA extends to individuals with a combined gross income exceeding £30,000 in the 2025–2026 tax year, encompassing a larger amount of sole traders who need to go through the same process. 

If you want to check your eligibility for MTD, get help selecting suitable software, training on this software or help with the transaction recording (bookkeeping), we are here for you. Please reach out for a complimentary consultation on 07825419426 or laura@bodycotbookkeeping.co.uk

Remember, by proactively preparing for MTD, you can ensure a smooth transition to the new system and maintain compliance with HMRC requirements!