Making Tax Digital for income tax self-assessment (MTD for ITSA) is now delayed until April 2026, but that doesn’t mean you’re off the hook just yet. The Government postponed the initiative for one key reason: self-employed taxpayers aren’t ready for it. Embracing this new way of doing taxes ahead of time can help you comply with MTD for ITSA when the rules come into effect — and may even help improve your existing processes now.

How can self-employed people get MTD-ready?

MTD reporting is a big shift from the processes we’re all used to. Thankfully, there are a few things you can do to prepare for this change.

Find out when MTD for ITSA will affect you

A new phased approach to MTD for ITSA means the rules won’t apply to all self-employed people at once. Only sole traders and landlords with a turnover of more than £50,000 a year must comply in April 2026, while those making between £30,000 and £50,000 won’t be mandated until April 2027. The Government is yet to set compliance dates for people in partnerships or those on smaller incomes. So if you’re making less than £30,000 a year, you’ll need to keep an eye out for any updates.

Familiarise yourself with the new rules

Once MTD for ITSA comes into effect, you’ll need to use MTD-compatible software to:

• keep digital records of all business income and expenses
• send quarterly updates to HMRC to give an estimate of your tax bill
• finalise your business income with an end-of-period statement.

That means no more filing self-assessment tax returns at the end of each tax year — this will replace the old system entirely.

Keep digital records

Once MTD for ITSA takes effect, you’ll need to keep detailed digital records of all your business transactions. If you have more than one business, you’ll need to keep separate records and make separate submissions for each income source.

Digitising your records won’t just help you with compliance — it also comes with a number of other benefits. If you often travel for work, the ability to access information on the go is very appealing. You won’t need to sit in your office to access your financial information; you’ll be able to see real-time information whenever you need it, wherever you are.

We can help you gather the necessary financial records so you can easily move your information over. Digitising the tax system is supposed to simplify managing your liabilities, so why not take advantage of that now?

Choose the right software

If you aren’t already using MTD-compatible software, now is the time to start. Most mainstream cloud accounting software programs already support MTD for VAT and should be set up for MTD for ITSA when the rules come into effect.

With so many software packages on the market, finding the right software can be difficult, so you should consider your options carefully. We swear by QuickBooks, but it all depends on what suits your business best.

Talk to your accountant

Making the transition to a brand-new tax system does seem daunting, particularly if you’re unfamiliar with cloud computing or aren’t aware of what your obligations will be under MTD for ITSA. That’s where we come in. We can help you prepare for MTD for ITSA and answer any questions or concerns you may have. It’s our job to know how new legislation will affect our clients, so we’ll keep you in the loop if anything changes.

Talk to us to find out how we can help your self-employed business get MTD-ready.