Making Tax Digital for Income Tax (MTD ITSA): Everything You Need to Know in 2025
The UK tax system is entering a major digital transformation. From April 2026, Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will change how millions of self-employed individuals and landlords report their income.
If you are self-employed, a landlord, or both, now is the time to prepare. At Persona Finance, we help clients transition smoothly, ensuring that their systems, records, and processes are fully compliant before the deadline.
What Is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) is HMRC’s long-term plan to make tax administration more effective, efficient, and easier for taxpayers.
Under MTD for Income Tax, you will:
Keep digital business and property records,
Submit quarterly updates of your income and expenses using approved software, and
Submit a final declaration after the tax year ends (replacing your annual Self Assessment return).
The goal is to reduce manual errors, improve accuracy, and help taxpayers better understand their financial position in real time.
Important Update from HMRC: November 2025 Letters
Starting from November 2025, HMRC will begin sending letters to individuals who have submitted their 2024–2025 tax returns, informing them about the upcoming Making Tax Digital for Income Tax changes.
Here is what the letter will include:
Notification that, based on submitted information, they will need to use MTD for Income Tax from April 2026.
Instructions on how to prepare and what steps to take next.
A QR code linking directly to official GOV.UK guidance for further support.
A reminder to contact their tax agent or accountant to discuss preparation steps.
This means accountants and tax advisors may start receiving more questions from clients regarding MTD readiness.
At Persona Finance, our team is already helping clients review their income levels, assess eligibility, and sign up early to avoid last-minute issues. If you receive one of these letters, it is essential to act quickly and confirm your next steps.
Who Must Follow MTD for Income Tax?
The MTD ITSA rules apply to:
Self-employed individuals (including freelancers and sole traders),
Landlords earning rental income from UK properties,
Anyone with combined self-employment and property income above £50,000.
The rollout schedule is as follows:
From 6 April 2026 – mandatory for those with qualifying income over £50,000.
From 6 April 2027 – mandatory for those with income above £30,000.
Further stages may extend to those with lower earnings, but no date has been confirmed yet.
Partnerships and individuals earning below these thresholds are currently exempt but can choose to sign up voluntarily.
Key Deadlines and Timeline
November 2025: HMRC sends awareness letters to taxpayers.
6 April 2026: MTD ITSA becomes mandatory for those with income above £50,000.
6 April 2027: Extension to those earning above £30,000.
Quarterly update deadlines: Usually 7 August, 7 November, 7 February, and 7 May.
Final declaration deadline: 31 January following the end of each tax year.
Preparing in advance ensures a smooth transition without risk of penalties or missed submissions.
Your Responsibilities Under MTD ITSA
From April 2026, if you fall within the qualifying income threshold, you must:
Keep digital records of all business income and expenses using MTD-compatible software.
Submit quarterly updates directly to HMRC via that software.
Provide an end-of-period statement (EOPS) at the end of each trading period.
Submit a final declaration confirming all income sources and adjustments by the 31 January deadline.
HMRC will no longer accept manual or paper submissions for these taxpayers.
Benefits of Making Tax Digital for Income Tax
While the transition requires some effort, MTD ITSA offers significant long-term benefits:
Improved accuracy by reducing human error and data duplication.
Better visibility of your tax position throughout the year.
Real-time updates that support smarter cash flow management.
Simplified compliance through automated calculations and digital submissions.
More confidence in planning and forecasting your finances.
Many businesses that already switched to MTD for VAT report feeling more in control of their taxes.
Challenges and How to Overcome Them
The main challenges businesses face with MTD ITSA include:
Adapting to new software systems,
Learning quarterly reporting processes, and
Managing more frequent submissions.
These can be resolved by adopting the right software early and working with a professional accounting partner. Persona Finance offers full setup and training for MTD-compatible systems, ensuring that clients are comfortable before the regime begins.
How to Prepare Now
Identify if you are affected – review your total income from self-employment and property.
Choose your software – select an HMRC-approved accounting platform.
Digitise your records – stop using spreadsheets or paper records for tracking income.
Work with an accountant – your accountant will help you register, test submissions, and ensure compliance.
Sign up early – avoid the last-minute rush by volunteering for early adoption before April 2026.
Remember, HMRC will start notifying taxpayers in November 2025, but you do not need to wait for a letter to prepare.
Common Misconceptions About MTD for Income Tax
“I already file online, so I am compliant.” Filing online through HMRC is not the same as MTD. You must use MTD-compatible software that sends data automatically.
“It does not apply to landlords.” Landlords are included if they earn more than £50,000 from rental income from 2026 onwards.
“I can keep using spreadsheets.” Only if they connect to bridging software that digitally submits data to HMRC.
“It is optional.” MTD ITSA is mandatory for qualifying taxpayers — voluntary compliance is encouraged before the rollout.
How Persona Finance Can Help You Get Ready
At Persona Finance, we have extensive experience guiding clients through digital tax transitions, including MTD for VAT and the upcoming MTD for Income Tax.
We can help you:
Review your eligibility and timeline,
Set up and connect MTD-compatible software,
Digitise your records and workflows,
Manage your quarterly submissions and final declarations,
Stay compliant and avoid HMRC penalties.
We offer a transparent fixed-fee service, ensuring that your business remains compliant and stress-free while you focus on growth.
👉 Contact Persona Finance today to prepare for Making Tax Digital for Income Tax — before the letters from HMRC arrive.