MTD for ITSA practical tips

The deadline for MTD for ITSA compliance is 1st April 2026 for sole traders with sales over £50,000 and 1st April 2027 for sole traders with sales over £30,000, but there are still several things you can do now to prepare your business for the new tax law.

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MTD for ITSA is a major change in the way that businesses report their earnings to HMRC. However, it is important to understand how the new system will affect your business and make sure your business is prepared for it. It is essential to have a plan for MTD for ITSA implementation to prepare for the changes. Here are some practical tips to make the transition easier. 

Sign up for the MTD for ITSA via the HMRC website

You can voluntarily sign up for MTD for ITSA pilot scheme. It has been running since 2018 and there are a number of eligible businesses and landlords that can sign up now.

Check out this guide to learn how to sign up for MTD for ITSA.

Digitalise your accounting records

One of the best ways to prepare for MTD is to start digitising your accounting records. This will give you a better understanding of your business and prevent unpleasant surprises in your tax bill. 

You'll also benefit from improved cash flow, which will allow you to make more informed decisions. And, digitisation of your accounting records will allow you to access and store the information you need at a much faster pace.

Find the best MTD for ITSA compliant software for your business

MTD for ITSA-compliant software makes it easier to keep accurate records of business expenses and reduces the chances of making mistakes. If you use software that makes it easy to report your business expenses, you'll reduce your tax bill and have a more accurate picture of what you owe. In addition to lowering your tax bill, you can budget accordingly for future taxes by using MTD for ITSA-compliant software.

Submit your business income and expenses summaries

The new MTD for ITSA rules, state that you’ll need to send your business’ income and expenses updates to HMRC every three months.

From the start of the tax year on 6th April, the deadlines are:

  • 5th August
  • 5th November
  • 5th February
  • 5th May

You’ll also need to finalise your business income. At the end of the tax year, an End of Period Statement (EOPS) will need to be provided for each income source separately along with a final declaration.

Wrapping up

MTD for ITSA has been a controversial topic for some time now, but it has gained increasing attention as the government aims to get accurate data about business performance. The new penalty regime also gives the government an extra reason to want accurate data about business performance.

You should be prepared to keep electronic records of business income and expenses. Use suitable software or spreadsheets to store and report this data. It will also be necessary for you to file quarterly returns to HMRC and provide an end-of-period statement.

Additional useful information

Pros and cons of voluntary VAT registration

MTD for Income Tax Self Assessment - what it means for your business

MTD for VAT is coming soon - are you ready?

Making Tax Digital FAQs

Making Tax Digital deadlines - key dates to know

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