What MTD ITSA Means in Practice
Instead of one annual Self Assessment return, taxpayers in scope of MTD ITSA will make five submissions per income source per year:
- Four quarterly updates summarising income and expenses.
- One final declaration after the end of the tax year that finalises taxable profit and tax due.
What Stays the Same
MTD ITSA does not change tax rates, allowances, or the dates tax must be paid (31 January and 31 July payments on account continue). Self Assessment itself is not abolished — it continues for income types outside MTD ITSA, but the final declaration becomes the year-end mechanism for taxpayers in scope.
What Changes
- You must keep digital records in MTD-compatible software.
- You must submit quarterly updates through software, not by typing into HMRC online.
- You must finalise each tax year via a final declaration.
- HMRC's points-based late submission penalty regime applies.
Who Is in Scope
Sole traders and UK landlords with combined gross self-employment and property income above the qualifying threshold for that tax year. Limited companies, partnerships (initially), employees on PAYE, and pensioners with no qualifying income are outside MTD ITSA.