Making Tax Digital for Income Tax (MTD ITSA)

From April 2026, HMRC is introducing Making Tax Digital for Income Tax (MTD ITSA). This will affect sole traders and landlords with combined business and/or property income over £50,000. This will subsequently decrease to £30,000 from 2027/2028 tax year and then £20,000 from 2028/2029 tax year.

At KMP Associates, we are fully prepared to support you through this transition, ensuring you remain compliant while keeping the process as straightforward as possible. We have also been actively involved in the HMRC MTD ITSA pilot scheme during the 2025/2026 tax year, giving us practical, first-hand experience of both the reporting process and the software solutions available.

What is changing?

Under MTD ITSA, affected individuals will be required to:

• Keep digital records of income and expenses
• Submit quarterly updates to HMRC throughout the tax year
• Complete a final declaration at year-end

These changes replace the traditional single annual Self Assessment submission with a more frequent, digital reporting approach.

HMRC has confirmed a soft-landing period for those joining from April 2026. This means that penalties for late quarterly submissions will not apply in the first year, giving businesses time to adapt. However, ongoing compliance will be essential beyond this transition period.

Software we support

We work with a range of HMRC-recognised software solutions and will help you choose and implement the most appropriate system for your business.

Our supported platforms include:

• Dext Solo – ideal for sole traders and landlords with simpler affairs
• Dext (full version) – suitable for VAT-registered businesses or those needing more advanced functionality
• FreeAgent – available free with certain business bank accounts, offering a complete bookkeeping and submission solution
• QuickBooks and Xero – widely used cloud accounting platforms, fully compatible with MTD

Through our involvement in the HMRC pilot, we have gained hands-on experience in setting up, testing, and operating these systems in real scenarios. This allows us to guide clients efficiently and avoid common pitfalls during implementation.

Our service packages

We offer flexible service levels to suit different business needs and preferences:

Deadlines and record keeping

To meet HMRC requirements, records must be maintained digitally and provided promptly. We require all quarterly information shortly after each quarter end to allow sufficient time for processing and submission. Your chosen software will also provide reminders and visibility of upcoming deadlines.

Tax payments

It is important to note that MTD ITSA does not change when tax is payable.

• Income Tax and National Insurance contributions remain due under existing deadlines
• Quarterly updates are for reporting purposes only
• The final declaration confirms your overall tax position for the year

How we support you

We understand that these changes introduce new processes and responsibilities. Our role is to make the transition as smooth as possible by:

• Helping you select and implement the right software
• Providing onboarding and training support
• Managing submissions and compliance requirements
• Offering ongoing guidance tailored to your business

Get started

If you would like to discuss how MTD ITSA will affect you, or which service package is most suitable, please get in touch with our team on 01708 463888/01702 552002 or info@kmpassociatesuk.com

We are here to support you every step of the way.