Making Tax Digital for Income Tax Self Assessment — the complete HMRC guide. Qualifying income thresholds, quarterly update deadlines, End of Period Statement, Final Declaration, and what happens if you don't comply.
Per HMRC's published guidance, eligibility for MTD ITSA is based on your qualifying gross income — not your taxable profit. Your eligibility year is determined by the income reported in your previous Self Assessment return.
HMRC assesses MTD ITSA eligibility on qualifying gross income before any expenses, allowances or deductions. A sole trader with £52,000 gross revenue and £30,000 costs (£22,000 taxable profit) must still join MTD from April 2026 — because the gross figure exceeds £50,000. This is the single most common misconception about MTD eligibility.
| Income Type | Counts Toward MTD Threshold? | How Assessed |
|---|---|---|
| Self-employment / trade income | ✓ Counts | Gross turnover before any business expenses |
| UK property income (residential) | ✓ Counts | Gross rent received before mortgage, repairs, agent fees |
| Furnished Holiday Lettings (FHL) | ✓ Counts | Gross FHL income — counts even after April 2025 FHL reform |
| Multiple self-employment trades | ✓ All combined | All trades' gross income added together |
| CIS gross payments received | ✓ Counts | Gross contract amounts before CIS deductions |
| Employment income (PAYE) | ✗ Does not count | Employment income is excluded from qualifying income |
| Dividends | ✗ Does not count | Dividend income excluded from qualifying income threshold |
| Savings interest / investment income | ✗ Does not count | Investment income excluded from qualifying income threshold |
| State Pension / private pension | ✗ Does not count | Pension income excluded from qualifying income threshold |
| Partnership income (as entity) | ✗ Deferred | Partnerships deferred from MTD — no mandation date set |
Per HMRC's published guidance, the MTD ITSA reporting cycle for each tax year consists of five stages — four quarterly updates, followed by the End of Period Statement and Final Declaration.
Submit a summary of your income and expenses for the first quarter via your MTD software. The software sends this directly to HMRC via the API. You submit totals by category — receipts and invoices are kept in your digital records but not sent to HMRC. Per HMRC's guidance, the submission shows cumulative year-to-date figures.
Due: 7 AugustSecond quarterly update covering the period 6 July to 5 October. Your software accumulates transactions from your digital records and generates the cumulative totals required. Most MTD software automates the calculation — you review and confirm before submission.
Due: 7 NovemberThird quarterly update. If you have elected calendar quarters (available where your software supports it, per HMRC's guidance), your quarter end is 31 December rather than 5 January — with the same 7 February deadline. Calendar quarter election must be made before the first quarterly update is submitted for the tax year.
Due: 7 FebruaryFinal quarterly update for the tax year. After this submission, the annual end-of-year process begins. Your software should have accumulated all transactions across the four quarters at this stage.
Due: 7 MayPer HMRC's published guidance, the EOPS is submitted via your MTD software. This is where you finalise adjustments that cannot be included in quarterly updates — including capital allowances, private use adjustments (e.g., home office or vehicle), simplified expense elections, and any property income adjustments. The EOPS confirms your final taxable profit or loss for each source of income for the period.
Due: 31 January (following tax year)The Final Declaration replaces the old Self Assessment tax return. Per HMRC's published guidance, it is submitted through your MTD software and is where you: add all other income sources (employment income, savings interest, dividends); claim any additional reliefs (Gift Aid, pension contributions); and confirm your total tax position for the year. Tax payment dates are unchanged — 31 January balancing payment and 31 July payment on account.
Due: 31 January (following tax year)Per HMRC's published guidance, MTD ITSA requires specific digital records to be kept and maintained throughout the year. These must be kept in HMRC-recognised software (or a digitally linked spreadsheet with bridging software).
Per HMRC's guidance, businesses with gross turnover below the VAT threshold (£90,000 for 2024/25 and 2025/26) can use simplified three-line accounts in quarterly updates — reporting only:
Those above the VAT threshold must use the full SA103F / SA105 category breakdown.
This guide summarises HMRC's published MTD ITSA guidance. For your specific income threshold position, software setup, and quarterly reporting workflow, our free matching service connects you with verified MTD-ready UK tax professionals.
Informational guide only — not personalised tax guidance. This page summarises HMRC's published MTD ITSA guidance with direct GOV.UK source links. Your MTD eligibility depends on your specific income position. Always verify your threshold position on GOV.UK and consult a qualified tax professional before acting. UK Tax Hero is not regulated by HMRC, the FCA, or any professional body.
