Making Tax Digital: A Self-Employed Guide to ITSA Changes

If you are self-employed, big changes are coming to how you report and pay tax. HMRC is bringing in Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA). It will affect how you keep records and submit returns.

This guide explains the key points, what you need to do, and how to get ready with less stress. MTD for ITSA is not just for accountants or big firms — it will apply to sole traders, landlords, and many small business owners across the UK.

Let’s break down what it means for you and how to stay ahead.

What is Making Tax Digital for ITSA?

A new HMRC rule starting April 2026
For self-employed people and landlords with annual income over £50,000
Will extend to those earning over £30,000 from April 2027
Replaces the annual Self Assessment with quarterly updates
Aims to make tax reporting more accurate and timely
Requires digital record keeping and using HMRC-approved software

Who Will Be Affected?

Sole traders (self-employed people)
Landlords (earning rent from property)
People with multiple income streams (e.g. from work and letting)
Partners in partnerships (coming later)

If your total income from self-employment and/or property is above the threshold, you must follow MTD rules from your start date.

What Will Change Under MTD for ITSA?

You will need to:

Keep digital records of your income and costs
Send updates to HMRC every 3 months (4 times a year)
Submit an end-of-period statement (EOPS) to confirm figures
File a final declaration once a year to confirm all income and allowances
Use approved MTD-compatible software (no more paper or spreadsheets)

What Counts as Digital Record Keeping?

You must record the following using software:

Dates of income and costs
Amounts received and spent
Categories for tax (e.g. travel, office supplies)
Invoices and receipts (can be uploaded or scanned)

You can no longer rely on manual ledgers or basic spreadsheets.

Key Deadlines to Remember

If you join MTD in April 2026, your deadlines will be:

First quarterly update: by 5 August 2026
Second update: by 5 November 2026
Third update: by 5 February 2027
Fourth update: by 5 May 2027
End-of-period statement: by 31 January 2028
Final declaration: by 31 January 2028

These dates will repeat each year.

What Stays the Same?

You will still pay your tax by 31 January each year
You will still be able to claim allowances and reliefs
You will still need a Unique Taxpayer Reference (UTR)
You may still pay payments on account, depending on your tax due

What Are the Benefits of MTD?

Although it means change, there are some upsides:

Less last-minute panic at year-end
Fewer errors from missing records
Better cashflow planning through regular updates
Easy access to income reports during the year
Software can make filing quick and stress-free

What Are the Challenges?

Some things you may need to prepare for:

Getting used to sending updates more often
Choosing the right software to meet HMRC rules
Learning to record costs and income in real time
Making sure you keep digital copies of receipts
Staying on top of all four deadlines a year

How Can You Get Ready for MTD?

To make the change smooth:

Check your income – if it is over £50,000, you will need to follow MTD rules from April 2026
Get MTD-compliant software – this is key to submitting updates and keeping records
Start keeping digital records now – get into the habit before the deadline
Speak to an accountant – they can help you stay on track and file correctly
Keep receipts and invoices safe – scan or upload them to your software
Set reminders for quarterly updates and tax dates

What Software Can You Use?

HMRC has a list of MTD-compatible software providers. You need to use one of these to send updates. The software should:

Let you track income and costs in real time
Create and send your quarterly updates
Help you complete the end-of-period statement and final declaration
Keep your records safe in the cloud
Make reports easy to understand

What Happens If You Do Not Follow MTD?

HMRC will apply penalties for those who do not comply:

Late filing penalties (points system, leading to fines)
Interest on late tax payments
Loss of access to payment plans if records are not in order

It is better to prepare early and avoid fines or stress.

Tips to Stay Ahead of MTD

Here are some easy steps to get ahead now:

Start using digital software even before it is required
Do a test run with quarterly updates this year
Ask your accountant to review your digital records
Keep your income and expenses updated every week
Store photos of all receipts using mobile apps
Review your reports monthly to check if anything is missing
Make tax part of your routine – not just a once-a-year task

How Nomi Can Help You with MTD for ITSA

At Nomi, we understand how tricky tax can be for the self-employed. That’s why our cloud accounting software is designed to make it simple.

With Nomi, you can:

Track income and expenses in real time
Scan and upload receipts on the go
Send quarterly updates with just a few clicks
Create end-of-period statements without hassle
Link your bank account for faster tracking
Get reminders for every deadline
Share data with your accountant easily
Stay compliant with HMRC rules

Whether you are a sole trader, landlord, or both Nomi is here to support you every step of the way.

Conclusion

Making Tax Digital for ITSA is a big shift in how you report and pay tax. But with the right support and tools, it does not need to be hard.

By preparing now, using software, and getting help when you need it, you can stay on top of your tax duties with ease. And with Nomi on your side, you will never miss a deadline or struggle with records again.

Start your digital tax journey with Nomi today and be ready before MTD becomes the law.

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