Making Tax Digital for Income Tax: What Accountants Need to Know in 2025
Priyanka Mehta
Head of Tax Services, ACCA ATT
What is MTD for Income Tax?
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC's next phase of its Making Tax Digital programme. From April 2026, self-employed individuals and landlords with annual income over £50,000 will be required to keep digital records and submit quarterly updates to HMRC, with a final end-of-period statement replacing the current self-assessment return.
The Key Dates
- April 2026: Mandatory for those with income over £50,000 - April 2027: Extended to those with income over £30,000 - TBC: Lower threshold (expected to be £20,000 or lower)
What Changes for Your Clients
Instead of one annual return, affected clients will submit:
1. Four quarterly updates summarising their business income and expenses 2. An End of Period Statement (EOPS) confirming the figures are complete and correct 3. A Final Declaration replacing the current self-assessment return
How Practices Should Prepare Now
1. Identify Affected Clients
Run a report from your practice management software to identify all self-employed and landlord clients with income over £50,000. These clients need to be on digital-compliant software by April 2026.
2. Assess Software Readiness
Not all accounting software is MTD ITSA compatible. Currently, HMRC-approved bridging software includes Xero, QuickBooks, FreeAgent, and several others. Check your clients' current software against HMRC's approved list.
3. Communicate Early
Clients affected by the first wave are likely your higher-value clients. Early communication builds trust and gives them time to adapt without crisis.
4. Price Your Services
Quarterly work is four times as frequent as annual. You'll need to review your pricing for MTD-affected clients to reflect the increased engagement frequency.
How Taxperts Can Help
We already handle MTD VAT submissions for many of our clients' practices. As MTD ITSA approaches, we can extend our quarterly digital reporting service to cover income tax too — handling the data processing and quarterly submissions so your clients' paperwork comes to us, not you.
If you'd like to discuss how to prepare your practice for MTD ITSA, get in touch with our team.
Priyanka Mehta
Head of Tax Services, ACCA ATT
Member of the Taxperts advisory team. Writes on UK tax, accounting standards, and practice management.
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