Citing a “challenging economic environment” for landlords and the self-employed, HMRC have announced that the transition to Making Tax Digital for Income Tax Self-Assessment will be phased in from April 2026, rather than April 2024. In this article we’ll look at how this will work, and how it might affect you.
What is MTD ITSA?
MTD ITSA (Making Tax Digital for Income Tax and Self-Assessment) is the new way to declare self-employed income and rental income this will apply to some tax payers from 6th April 2026. Orange Genie Accountancy will be supporting all clients that are affected by moving them onto digitally approved software in the coming months to allow for adjustments, transition, and training before the deadline.
Those affected will be required to keep digital records and make quarterly submissions to HMRC using “digital approved software”. There will also be an End of Period Statement and Final Declaration after the tax yearend that includes any non-business information.
That amounts to 6 returns in total if you have one stream of income affected, an additional 5 returns to file compared to what you may be used to. If you’re self-employed, registered for VAT and have property income, you can expect to file 16 returns a year!
When will MTD ITSA now be implemented?
MTD ITSA will now be phased in, so when you’re affected will depend on your income:
From April 2026, individuals and landlords with an income of more than £50,000 are affected
From April 2027, the rollout will be extended to those with an income between £30,000 and £50,000
The Government has announced a review into the needs of smaller businesses, which will inform the rollout to those with incomes below £30,000, so we can expect further announcements in due course.
Who is affected by MTD ITSA?
HMRC will be able to determine if your business is affected by looking at the last submitted tax return (2024/2026). If turnover is not reported on the tax return because it is covered by the property income allowance, sundry trading income allowance, or rent-a-room relief, it is not included in the MTD turnover test.
If you receive a notice from HMRC (expect these early 2026) that you have been mandated into MTD for ITSA but you are no longer trading, then Orange Genie Accountancy will support you in removing yourself from the scheme.
What can you do to prepare?
You will need to start transitioning yourself from paperless and manual records over to digital approved software ahead of April 2026. By keeping your records digitally, you will get better insight into how your business or rental property is performing and how you will be able to make improvements before the tax yearend, you will be able to run your business in a more proactive manner, rather than reactively always looking back on information when preparing your self-assessment return.
You don’t want MTD ITSA to start taking time away from running your business and generating a profit, and that’s why having a good accountant to support you during this journey will alleviate the pressures of additional work, compliance, and administrative tasks. Orange Genie Accountancy can do this by assisting you with setting up the correct software, showing you how to input your records, submitting quarterly returns and provide expert advice on where you can start saving tax.
If you are lucky enough to be one of our existing clients, we will be in contact with you in the coming months to discuss the move to digital record keeping and the plan for the next few years leading up to when MTD for ITSA is mandated.
For more information, read our Guide for Residential Landlords, call our expert team on 01296 468 483 or email info@orangegenie.com.