Being a part time finance director and profit consultants, we are always on the lookup out on issues we need to make our clients and contacts aware of issues that might affect them.

Sole traders and landlords will soon need to get to grips with Making Tax Digital for Income Tax Self-Assessment (“MTD ITSA”). MTD ITSA will be phased in from April 2026 and will require digital records to be kept with quarterly online reports to be made to HMRC using compatible software. Our part-time Finance Director can help you in the process.

Who will need to use Making Tax Digital for Income Tax

You’ll need to use Making Tax Digital for Income Tax if all of the following apply:

• you’re a sole trader or a landlord registered for Self Assessment

• you get income from self-employment or property, or both

• your qualifying income is more than £20,000.

Qualifying income is the total income you get in a tax year from self-employment and property. All other sources of income reported through Self Assessment, such as income from employment (PAYE), a partnership or dividends (including those from your own company), do not count towards your qualifying income.

When you need to start using MTD ITSA depends on your qualifying income within a tax year. If your qualifying income is over:

• £50,000 for the 2024/25 tax year, you will need to use it from 6 April 2026

• £30,000 for the 2025/26 tax year, you will need to use it from 6 April 2027

• £20,000 for the 2026/27 tax year, you will need to use it from 6 April 2028.

You do not need to use Making Tax Digital for Income Tax if your qualifying income is £20,000 or less.

What to do if you need to use the service

If you need to use MTD ITSA, you should prepare now and should be signed up for the service before you need to use it. Remember that those with qualifying turnover above £50,000 for 2024/25 will need to start using MTD ITSA from April next year. Please contact us if you would like to appoint us as agents to act for you.

If you need help with MTD ITSA or need our profit consultants or part time finance directors then get in touch with us today at [email protected] or call us on 01628 623444.