MTD for Income Tax Self-Assessment launched on 6 April 2026. HMRC is now mailing letters to self-employed individuals and landlords with 2024/25 gross income over £50,000 from self-employment and/or property. If you’re in scope, sign up immediately via HMRC’s portal. This post breaks down requirements, deadlines, penalties, and practical steps for compliance.
Who Must Comply?
Mandatory for 2026/27 tax year if 2024/25 total self-employment + property income exceeds £50,000 (before expenses). Multiple businesses aggregate.
Official sign-up guidance requires Self Assessment registration and a return filed in last 2 years. Agents can sign up on your behalf.
Exemptions possible for digital exclusion; check eligibility.
Digital Records
Keep income/expenses digitally from 6 April 2026. Software must create, store, copy, and correct records. Spreadsheets OK if MTD-compatible.
Include other income (pensions, dividends) in software for final return.
Quarterly Updates
Submit summaries 5 days after month-end: 7 Aug, 7 Nov, 7 Feb, 7 May 2027 for 26/27.
First year (26/27): No penalty points for late submissions, but submit before SA return (31 Jan 2028).
Software Requirements
Use HMRC-recognised MTD ITSA software. Finder tool recommends based on needs.
Examples: Sage 50cloud, FreeAgent, QuickBooks, Xero (check status), bridging tools for spreadsheets.
Penalties: Points for Submissions, % for Payments
Late Submissions (post-26/27): 1 point per missed quarterly/SA. £200 at 4 points, +£200 per further miss. Reset after 12 on-time + clear 24 months back.
| Missed Deadlines | Penalty |
|---|---|
| <4 points | None (auto-remove after 24m) |
| 4+ points | £200 + ongoing |
Late Payments: Grace 30 days first year (15 thereafter). Then tiered:
| Days Late | 26/27 Penalty | 27/28+ |
|---|---|---|
| 0-15 | 0% | 0% |
| 16-30 | 3% | 4% |
| 31+ | 3%+3%+10%/yr daily | 4%+4%+10%/yr daily |
Interest from day 1 late. Contact HMRC for plans to pause.
Agent and Umbrella Changes
Tax agents must register with HMRC from 1 April 2026; unlimited fines for aiding evasion. CIOT/ATT on letters.
Umbrella firms: End-clients liable for PAYE if non-compliant from 6 April.
CFO Practical Steps
- Verify 2024/25 income; sign up.
- Select/test software now.
- Train staff/processes for digital records.
- First update due 7 Aug 2026 – prep Q1 data.
- Review cashflow for quarterly visibility.
Volunteers: Full penalties apply.
Conclusion
MTD ITSA enforces real-time compliance. Act now to avoid pitfalls. For tailored advice, contact Tanous Limited.
Mark Hendy, PE-facing CFO, Tanous Limited