Making Tax Digital for Income Tax Self Assessment (MTD ITSA) goes live on 6 April 2026 for sole traders and landlords with qualifying income above £50,000. By April 2027 the threshold drops to £30,000. By April 2028 it drops again to £20,000. If your accountant has not started talking to you about this, you are already behind.
This is the practical calendar — what you file, when, and what compliant software needs to be in place before the first quarter even starts.
Who is affected (and when)
HMRC's phased rollout for MTD ITSA looks like this:
| Date | Threshold | Who's caught |
|---|---|---|
| 6 April 2026 | Qualifying income > £50,000 | ~780,000 sole traders & landlords |
| 6 April 2027 | Qualifying income > £30,000 | An additional ~970,000 taxpayers |
| 6 April 2028 | Qualifying income > £20,000 | Another ~900,000 taxpayers |
"Qualifying income" means gross self-employment income plus gross rental income — not profit. If you are a sole trader turning over £45,000 with £5,001 of rental income from a single buy-to-let, you are caught at the £50,000 threshold from April 2026.
What is not in scope (yet): partnership income, dividend income, employment income, and pension income. Limited companies file separately under MTD for Corporation Tax (timetable still TBC). But the partnership extension to MTD ITSA is expected in 2027 or 2028 — assume your partnership is next.
What actually changes
The Self Assessment paper return you've filed every January is gone. In its place:
- Four quarterly submissions per income source. One sole trade + one rental property = 8 submissions per year, not one.
- Digital records throughout the year — not a January reconstruction job from a shoebox of receipts.
- MTD-compatible software required. Excel spreadsheets alone are not compliant. You need either accounting software (Xero, QuickBooks, FreeAgent) or bridging software that pulls from your spreadsheet and submits via the HMRC API.
- A Final Declaration by 31 January each year, replacing the old Self Assessment return. HMRC removed the separate End of Period Statement (EOPS) from the regime — the year-end accounting adjustments, capital allowance claims and confirmation of all income sources are now made in the Final Declaration alone.
What does not change: how much tax you owe (the calculation rules are unchanged) and your January payment deadlines for the previous tax year's final liability and payments on account.
The MTD ITSA submission calendar 2026/27
For the first MTD ITSA year (tax year 2026/27, starting 6 April 2026), here is exactly what is due when. Quarterly submissions are due one month and seven days after the quarter end.
| Quarter | Period | Submission deadline |
|---|---|---|
| Q1 | 6 April 2026 – 5 July 2026 | 7 August 2026 |
| Q2 | 6 July 2026 – 5 October 2026 | 7 November 2026 |
| Q3 | 6 October 2026 – 5 January 2027 | 7 February 2027 |
| Q4 | 6 January 2027 – 5 April 2027 | 7 May 2027 |
| Final Declaration | Year-end adjustments + confirm all income for 2026/27 | 31 January 2028 |
Calendar quarters are also permitted as an election — Q1 ending 30 June, Q2 ending 30 September, etc. — provided you elect this on or before the first submission. For most clients we recommend sticking with the tax-year-aligned default unless your accounts already run to a calendar quarter end.
Each quarterly submission is a summary of business income and expense totals by category — not a profit calculation, not an adjustment for capital allowances, not a tax computation. HMRC processes the submission and returns an estimated tax position; the real reconciliation happens at the Final Declaration.
MTD-compliant software (the shortlist)
HMRC maintains a public list of MTD-compatible software. The four that handle ITSA-grade record keeping for sole traders and landlords without bridging gymnastics:
| Software | Best for | Approx cost | Notes |
|---|---|---|---|
| FreeAgent | Sole traders, NatWest/RBS/Mettle customers | £0 with eligible bank acc.; £19/mo otherwise | Designed for sole traders. Free for Mettle/RBS Group business banking. |
| Xero | Sole traders + landlords with multiple properties | £16–£59/mo | Strongest property-level reporting. Add Xero Tax for ITSA submissions. |
| QuickBooks Self-Employed | Single sole trade, no property | £10–£20/mo | Simplest UX. Limited if you also have rental income. |
| Coconut | Sole traders who hate accounting software | £9–£15/mo | Bank-feed driven, mobile-first. Submits MTD ITSA directly. |
Excel-only is not compliant. You can keep your records in Excel if you use HMRC-approved bridging software (e.g. BTCSoftware, Absolute, 123 Sheets) that maps your spreadsheet rows to the API. For most sole traders the £15/month of FreeAgent is cheaper than the time spent maintaining bridging mappings.
The 90-day MTD ITSA readiness checklist
If you cross the £50,000 threshold and start trading on 6 April 2026, here is what needs to be in place before then. Work backwards from January 2026.
- By 31 January 2026: File your 2024/25 Self Assessment as normal. This is the last "old-style" return. Use it as the dataset to set up your opening balances.
- By 28 February 2026: Choose and subscribe to MTD-compliant software. Test the bank feed against at least 30 days of historical transactions.
- By 15 March 2026: Set up your chart of accounts in the software. Map every income and expense category to HMRC's quarterly submission categories (turnover, allowable expenses by type, disallowable expenses).
- By 31 March 2026: Reconcile opening balances. Every business bank account, business credit card, and PayPal feed should be live and tagged.
- By 6 April 2026: Authorise your agent (if you use one) inside the software. Confirm HMRC has registered you for MTD ITSA — the sign-up is not automatic; you must opt in explicitly during the pilot, and from April 2026 it becomes mandatory.
- By 7 August 2026: File Q1. Allow at least three working days buffer before the deadline for first-time submission troubleshooting.
If you have a rental portfolio, repeat steps 3–5 for the property income source. You file one quarterly submission per source, not one combined.
Penalties and points
MTD ITSA uses HMRC's points-based late submission penalty regime. You accumulate one point per missed quarterly submission. When you hit the points threshold, a £200 financial penalty applies — and each subsequent late submission adds another £200.
| Submission frequency | Points threshold | Reset (clean record needed) |
|---|---|---|
| Quarterly (ITSA) | 4 points | 12 months of on-time submissions |
| Monthly | 5 points | 6 months of on-time submissions |
Late payment penalties are separate — 2% of unpaid tax after day 15 of being late, plus 4% if still unpaid after day 30, plus daily 4% annual on the outstanding balance from day 31. Late submission and late payment are stacked, not alternatives.
How a fractional finance director helps
For sole traders and small landlords, MTD ITSA is administratively burdensome but technically manageable — a £15/month software subscription and 30 minutes per quarter of reconciliation work.
Where a fractional finance director earns their fee is when the £50,000 threshold catches a business with multiple income streams: a consultant with a sole trade, a rental property, and a small media production company they run as a sole-trader sideline. Each income source needs its own digital record, its own quarterly submission, and its own end-of-period statement. The error surface area at the boundary — what counts as which source, how mixed-use expenses get split, how partnership income (when it joins the regime) overlaps — is where £200 penalty points get earned.
BlackpeakCFO sets up the software stack, designs the chart of accounts mappings, runs the first three quarters with you, and then hands over once the rhythm is in place. Typical cost: £495–£995 for setup and three quarters of supervised submissions.
Send your details — we reply within one business day, by email if you want a sanity check on your MTD ITSA readiness for April 2026.