Making Tax Digital for Income Tax Self-Assessment (ITSA): TWC has you covered
A quick refresher – what is Making Tax Digital for ITSA?
Making Tax Digital (MTD) is HMRC’s ongoing programme to modernise the UK tax system. After its rollout for VAT, the focus has now shifted to Income Tax Self-Assessment (ITSA), particularly for sole traders and landlords. From April 2026, affected individuals will be expected to keep digital records, submit quarterly updates, and replace their annual Self-Assessment return with a final year-end declaration.
It’s all about reducing mistakes – HMRC estimates around £5 billion is lost annually to avoidable errors, and increasing visibility for taxpayers, helping them stay on top of what’s owed throughout the year.
Who needs to be ready, and when?
If you earn more than £50,000 from self-employment and/or property, the changes apply to you from April 2026. If your income falls between £30,001 and £50,000, the requirement kicks in a year later in April 2027. There are also plans to bring those earning between £20,001 and £30,000 into the fold from April 2028, though this is still subject to final legislation.
It’s worth noting that HMRC will write to affected individuals in advance based on their 2024/25 tax returns, but ultimately, it’s your responsibility to prepare.
What does this mean in practice?
In short, the traditional annual tax return is on its way out. You’ll need to keep records digitally using HMRC-recognised software, Excel alone won’t cut it unless linked via bridging software. Four quarterly updates must be submitted throughout the tax year, summarising your income and expenses. Then, at year-end, you’ll submit a final declaration to tie everything together.
Here’s how TWC has you covered
We’ve been ready for this shift for some time. At Together We Count, we use Xero, which is fully MTD-compliant and actively developing workflows designed specifically for ITSA. We also support other compatible software’s that will assist with this change. If your records live in spreadsheets, we can connect you through trusted bridging software.
What does that mean for you? It means we can help you stay compliant without disrupting the way you work. Our bookkeeping schedule is already structured to meet quarterly deadlines, meaning your updates will be reviewed and submitted in good time.
But we don’t stop at compliance. With your data flowing into Xero in real time, you get immediate insights into profit, tax reserves, and cash flow. You’re no longer working blind until January, you’ll know where you stand at every point in the year.
We can support with training tailored to your experience if required. Whether you’re new to digital records or just moving platforms, we’ll help you set up your chart of accounts correctly, connect bank feeds and apps, and make sure you know how to keep things ticking over.
If you’re a landlord, we’ve got you covered too. Xero’s property features allow us to track multiple rentals, manage expenses like mortgage interest, and keep your reporting clean and simple. When it’s time to file, we can generate your quarterly property income reports in a few clicks.
We’re also keeping an eye on the penalties. From April 2025, late submissions will trigger points-based penalties and potentially steep fines. Our internal deadline tracking system means you won’t be caught off guard.
Why act now?
Moving early gives you time to learn the system while the stakes are low. HMRC’s live pilot programme is already up and running, and early adopters are getting hands-on support and even faster tax refunds. On top of that, having quarterly data gives you much more control over your cash flow and forward planning.
And the best bit? Once your records are digitised, they’ll feed into your VAT returns, year-end accounts, and even CIS submissions, cutting admin and duplication across the board.
What you should do next
If you’re a TWC client, start by checking whether your income will exceed £50,000 in the tax year. Then speak to your account manager to confirm which software you’d prefer to use.
And if you’re not a client yet? Now’s the time to get ahead of the curve. Email us at info@togetherwecount.co.uk and we’ll walk you through how we can get your business ready for MTD, without the stress.