MTD for ITSA: everything you need to know before next tax year

Digital Tax Creation for Income Tax Self Assessment (MTD for ITSA) is almost here.

For many accountants supporting self-employed clients or landlords, that means preparation time is running out.

So, what should you know Now?

We’ve put together a Q&A with all the answers.

When does the MTD for ITSA apply to your clients?

This depends on their income. From April 2026, MTD will be mandatory for clients with income over £50,000 from self-employment or property.

This threshold drops to £30,000 in April 2027.

The majority of remaining clients are likely to be protected when the income threshold drops to £20,000 in April 2028.

So, some clients need to prepare immediately, others a little late. But now is the time to understand the rules and start segmenting your client base.

How do I calculate income to determine whether MTD for ITSA applies?

The MTD threshold applies to the combined total of self-employment and property income. For example, a client earning £55,000 of income from a combination of these sources will be in scope from April 2026. If the combined self-employment and property income is below this threshold, they will not fall under MTD.

This is true even if they have other sources of income. Partnership income, employment income, and interest No counted towards the MTD threshold. Only self-employment and property income are relevant.

Based on the MTD for ITSA, what is the “new normal” for accountants?

MTD introduces a new rhythm to tax reporting: quarterly filing.

Any clients who exceed the threshold must submit updates every three months.

If a client has multiple trades, each trade requires its own quarterly submission. For properties, one application per quarter, regardless of the number of properties.

The application deadline is usually the seventh day of each month.

For one year the budget is as follows;

• The quarterly submission deadline (covering April 6 to July 5) is August 7.
• The second quarterly submission deadline (covering April 6 to October 5) is November 7.
• The quarterly submission deadline (covering April 6 to January 5) is February 7.
• The four-quarter submission deadline (covering April 6 to April 5) is May 7.

You may choose to do this by calendar quarter, but if you do, the deadlines will be the same.

For more details, here’s how MTD works for ITSA in calendar quarters:

• The quarterly submission deadline (covering April 1 to June 30) is August 7.
• The second quarterly submission deadline (covering April 1 to September 30) is November 7.
• The quarterly submission deadline (covering April 1 to December 31) is February 7.
• The four-quarter submission deadline (covering April 1 to March 31) is May 7.

Quarterly filings are cumulative, so anything you need to fix only needs to be changed in the next filing. You don’t need to go back and change anything.

Can only one accountant work on a client’s MTD for ITSA data?

No, multiple agents can be involved. This means different experts managing different aspects of a client’s affairs can log in and update information.

When you enroll a client in an Agent Services Account (ASA) for MTD for ITSA (see our guide for accountants), you can request to be:

1. main agent or
2. support agent

These options determine which parts of a client’s records you can view and what tasks you can perform on their behalf.

Let’s see how this would work for a sole trader who has a bookkeeper and an accountant. The bookkeeper is a supporting agent. They can complete and send quarterly updates. Meanwhile, the trader’s accountant is the main agent. They can complete year-end submissions in their tax returns.

Is there still anything that needs to be submitted after the end of the tax year?

Yes. In addition to quarterly updates, year-end submissions are also requireddue on January 31 following the tax year. So, for the 2026/27 tax year (ending 5 April 2027), your final statement must be submitted by 31 January 2028.

These are other income and relief a person may receive apart from self-employment or property rental. This includes interest, dividends, and employment.

It also includes any adjustments and allowances for each business. Examples are for capital allowances and non-business income.

This submission is followed by the final calculations returned by HMRC. The agent must resolve this.

When you add this process to quarterly updates, the administrative burden becomes real. However, with the right processes, this can be managed.

What are the MTD sanctions for ITSA?

At the time of writing, late submissions will accrue penalty points. However, this requires clear and final guidance from HMRC.

Rather than share any information that may cause unnecessary confusion, we suggest you check the HMRC website ahead of important dates.

Why not leave everything until the quarterly MTD for ITSA submissions begins?

Preparation Don’t left until the last minute.

Each client must register individually, and the process can take several minutes per client. Multiply that across your portfolio, and the work will add up.

It is also important to educate clients about what is changing and why. Many may not realize that something is happening. This of course takes time and will increase your workload.

If you segment your clients now, based on revenue source, the transition will be smoother.

Who is excluded from MTD for ITSA?

There are some automatic exceptions. This applies to people who are in unique situations, such as carers or if someone does not have a National Insurance Number. This move simplifies the process for individuals who were previously required to apply for an exemption.

One exception you still have to apply for is for “digitally excluded” people. This is where factors such as age, health or disability stop you from using a computer. This exception also applies to religious beliefs that affect computer use or to people who cannot access the internet due to their location.

What is the MTD registration journey like for ITSA?

There are several steps accountants need to take from the start. Skipping or rushing will likely cause problems later.

These include:

• Segment clients based on income and eligibility
• Discusses trials and mandates with clients, using educational materials when possible
• Ensure you have an Agent Services Account (ASA).
• Checks all clients transferred from any old Government Gateway account.
• Register each client with MTD via HMRC, well in advance of the deadline

Once this is done, you can authorize your software using your ASA credentials. From there, you can manage your obligations digitally.

Don’t miss our guide to this process.

What about partnership and corporate taxes under MTD? Should I also think about this type of client?

Some legislative updates are worth noting.

While the partnership (SA800) is expected to join MTD in the future, HMRC has not yet confirmed the timing. Meanwhile, plans to include corporate taxes in MTD have been scrapped. Instead, HMRC is moving towards a review of corporate tax standardization. This will impact how vendors deliver computing, but not through MTD itself.

Is MTD for ITSA a “one and done” exercise?

MTD for ITSA means you have to stay alert. Regular check-ups are highly recommended.

Clients who fall below the threshold for three consecutive years will automatically exit. You may also need to remove clients that do not need to comply with MTD before then to save time, effort and costs.

Do I and my clients need special MTD software for ITSA?

Yes, both accountants and clients require HMRC approved software for MTD. Clients can keep their records in bookkeeping or spreadsheet software. However, all shipments to HMRC must be via MTD compatible software. This includes quarterly updates and final declarations. If you use more than one system, they must be connected digitally (no manual copy and paste).

HMRC will not develop the software for this purpose.

What software do you need?

The UK government is very strict regarding which software is allowed to submit tax returns under MTD.

The good news is that The IRIS solution is now MTD ready. This update has been added at no additional cost.

Whether you use IRIS Elements or IRIS Cloud Accounting Suite, the tools are there to help you and your clients stay compliant. For practical guides, checklists and updates, our Accounting MTD Hub is your go-to resource.

If you’re interested in upgrading your software, check out our solutions.