This article discusses the important information sole traders and the self-employed need to know regarding Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA).
Making Tax Digital rules for Income Tax Self Assessment will come into effect from April 2026. You’ll need to sign up before the deadline if you’re self-employed, a sole trader or landlord earning above £50,000 from business and property. Those with an income between £30,000 and £50,000 will need to do this from April 2027. We’ve created a timeline showing when all of the MTD changes take place, which you can view below:
What does Making Tax Digital mean for the self-employed?
Instead of using HMRC’s website to file returns, digital records will need to be kept and compatible software will need to be used. When the rules come into effect, quarterly updates, an End of Period Statement (EOPS) and a final declaration will need to be submitted to HMRC.
The End of Period Statement (EOPS) will need to be submitted at the end of your fourth quarter, with the final declaration (which includes all other taxable income) to be submitted by January 31 every year.
Do all self-employed people have to go digital?
Unless you’re digitally exempt and/or do not meet the criteria, you will need to comply with MTD for ITSA. If you own multiple businesses, the income earned from all companies contributes to the £10,000 threshold.
You could be classed as digitally exempt if you live in a remote location, have a disability, or are elderly. You can request to be made exempt from MTD ITSA through the gov.uk website here.
Sole traders that are earning below the £10,000 threshold can continue filing their returns via the old HMRC system.
How can I sign up for MTD for Income Tax Self Assessment?
In order to sign up for MTD for ITSA, you will need to ensure that you have compatible software in place. This is because you need to register for the scheme through cloud-based software, rather than the HMRC website.
If you have compatible software in place but are still unsure on how to register, speak to your service provider or accountant. You’ll also need the following details to sign up:
- Your business name
- Business start date
- National Insurance number
- Email address
- Accounting Period
- Accounting Type
Do the self-employed need to sign up for MTD for VAT and MTD for ITSA separately?
Yes. As both systems are separate, you will need to sign up for both if you fall into the criteria. Some sole traders will be required to sign up to both systems, whereas others need only sign up to MTD for ITSA. If you’re unsure on whether MTD for VAT applies to you, read this guide.
Can an accountant sign a sole trader up for MTD for Income Tax Self Assessment?
Yes, they can. As well as signing you up, your accountant can also submit your quarterly updates, EOPS and final declarations for you.
Please get in touch to find out how we can help you with MTD for ITSA.
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