MTD ITSA from April 2026 UK sole traders above £50,000 income must use HMRC-recognised software. What this means for you
UK Tax and Compliance mtdhmrcukcomplianceitsaself-assessment

MTD ITSA

What is MTD ITSA?

MTD ITSA stands for Making Tax Digital for Income Tax Self-Assessment. It is HMRC’s requirement that self-employed individuals and property landlords above certain income thresholds submit quarterly digital updates to HMRC using approved software, and maintain digital records of their income and expenses.

MTD ITSA replaces the annual Self-Assessment return for those above the threshold. Instead of filing once per year by January 31st, you submit four quarterly updates during the tax year plus a final declaration.

MTD ITSA timeline

DateThresholdWho is affected
6 April 2026Over £50,000Self-employed individuals and landlords with combined income above £50,000
6 April 2027Over £30,000Additional group with income between £30,000 and £50,000
6 April 2028Over £20,000Additional group with income between £20,000 and £30,000

Income thresholds refer to your gross self-employment income plus gross property income combined. Verify your position with HMRC or your accountant.

Which software is HMRC-recognised for MTD ITSA?

HMRC maintains a list of MTD-compatible software on gov.uk. As of April 2026, software confirmed on the MTD ITSA compatible list includes:

  • Xero (Starter, Standard, and above)
  • FreeAgent (free with NatWest, Mettle, and Royal Bank of Scotland business accounts)
  • Sage Business Cloud Accounting
  • QuickBooks Self-Employed (limited functionality)

QuickBooks Online does not appear on the HMRC-recognised MTD ITSA list as of the date of this review. Verify directly with HMRC at gov.uk before choosing software.

Wave and FreshBooks are not HMRC-recognised for MTD ITSA.

Always verify the current HMRC-recognised software list at gov.uk/government/publications/making-tax-digital-software-suppliers before purchasing.

What happens if you do not comply?

HMRC can issue penalties for failing to maintain digital records or submit quarterly updates as required. The penalty system uses a points-based approach — accumulate enough points and a financial penalty is applied. HMRC had a soft-launch period in 2024-2025; enforcement is expected to tighten from April 2026.

MTD ITSA vs MTD VAT

MTD VAT (Making Tax Digital for VAT) has been live since April 2019 for all VAT-registered businesses above the threshold. MTD ITSA is a separate, newer requirement applying to Income Tax. Being MTD-VAT-compliant does not automatically mean you are MTD-ITSA-compliant — the software must be on the ITSA-specific recognised list.

This page is for informational purposes only. It is not financial or tax advice. Verify your MTD obligations with HMRC or a qualified accountant.