MTD for Self-Employed UK 2026: Your Complete Action Plan

April 2026 is a defining moment for self-employed people in the UK. Making Tax Digital for Income Tax Self Assessment becomes a legal requirement for the first wave of sole traders and landlords — and unlike VAT, which primarily affects how you submit returns, MTD for ITSA changes your entire approach to record-keeping and tax reporting throughout the year.

This is your complete action plan.

Understanding Your Position

Who Is Affected First?

From 6 April 2026, MTD for ITSA is mandatory if your qualifying income exceeds £50,000. Qualifying income means:

Gross income from self-employment (turnover, not profit)
UK rental income

Both are added together. If the combined gross total exceeded £50,000 in the previous tax year, you are in scope for April 2026.

The threshold drops to £30,000 from April 2027 and to £20,000 from April 2028 (proposed).

What If I Am Close to the Threshold?

If your income fluctuates around the threshold, HMRC assesses your obligation based on the previous tax year’s figures. If you were above the threshold in 2024/25, you are in scope from April 2026 even if 2025/26 turns out to be a quieter year.

However, if your income subsequently drops and stays below the threshold for a sustained period, you may be able to apply to HMRC to cease MTD reporting.

The New Reporting Structure

MTD replaces the single annual Self Assessment return with a multi-stage reporting process:

Stage 1: Quarterly Updates (4 per year)

Every quarter, you submit a summary of your income and expenses for that period directly to HMRC via your software. You are not calculating your exact tax bill — just reporting the figures.

Quarterly deadlines:

Quarter 1 (6 Apr – 5 Jul): Submit by 5 August
Quarter 2 (6 Jul – 5 Oct): Submit by 5 November
Quarter 3 (6 Oct – 5 Jan): Submit by 5 February
Quarter 4 (6 Jan – 5 Apr): Submit by 5 May

Stage 2: End-of-Period Statement

After the final quarter, you submit an EOPS confirming your annual figures for each income source (e.g., your plumbing business and a rental property would be separate sources). Here you also claim allowances and make any necessary adjustments.

Stage 3: Final Declaration

By 31 January following the tax year end, you submit your Final Declaration, which brings in all other income sources (employment, investments, pensions) and finalises your total tax liability.

Building Your MTD Action Plan

Now: Assess and Plan

Action 1: Calculate your qualifying income from your most recent SA return. Is it above £50,000?

Action 2: List all your income sources. Do you have both self-employment income and rental income? Both must be separately reported under MTD.

Action 3: Review your current record-keeping. How do you currently track income and expenses? Paper? Spreadsheets? Nothing formal?

In the Next Month: Choose and Set Up Your Software

Action 4: Research HMRC-recognised MTD software options. Prioritise software that is:

On HMRC’s recognised list for MTD for ITSA
Easy enough to use without training
Mobile-accessible if you work away from a desk
Affordable on an ongoing basis

Action 5: Sign up for a free trial of your chosen software and complete the setup: enter your business details, your HMRC credentials (to authorise the MTD connection), and your first few clients.

Action 6: Register for MTD for ITSA with HMRC. This can typically be done via your HMRC online account or through your software. Do not leave this until April 2026.

Before April 2026: Establish Your Processes

Action 7: Open a business bank account if you do not already have one. Separating business and personal finances is not legally required for sole traders, but it makes digital record-keeping dramatically simpler.

Action 8: Start recording all business transactions digitally now, even before your obligation begins. The transition will be smoother if you have several months of practice before your first mandatory submission.

Action 9: Set up a regular weekly review habit. Fifteen minutes each week to photograph receipts, check invoices sent against payments received, and keep your records current is far better than attempting to catch up every quarter.

Action 10: If you have an accountant, discuss the new arrangement. Will they access your software directly? Will you share exports? How will the quarterly submissions be handled — by you, by them, or collaboratively?

During 2026: Maintain and Submit

Action 11: Before each quarterly deadline, review your income and expense records for the period:

Are all invoices raised?
Are all payments received recorded?
Are all expenses captured with receipts?
Do your totals reconcile with your bank statements?

Action 12: Submit your quarterly update via your software. Your software should guide you through this process — it should not require manual intervention with HMRC’s systems.

Action 13: Note any adjustments needed — items that need to be corrected in a later period, capital allowances to claim, or allowances to apply at year-end.

Common MTD for ITSA Mistakes and How to Avoid Them

Mistake: Submitting bank totals rather than individual transactions Avoid by: Recording each invoice and payment individually in your software, not batch totals

Mistake: Forgetting to include cash payments Avoid by: Invoicing every job through your app, even cash jobs, to create an automatic digital record

Mistake: Not registering in advance Avoid by: Registering for MTD for ITSA with HMRC well before 6 April 2026

Mistake: Using software not on HMRC’s recognised list Avoid by: Checking the GOV.UK list before committing to any software

Mistake: Losing paper receipts and not being able to evidence expenses Avoid by: Photographing every receipt immediately using your app’s camera capture feature

The Positive Flip Side

Many self-employed people who have already gone through similar digital transitions — particularly those who switched to MTD for VAT — report that the new system, while requiring an adjustment period, ultimately makes their financial management better, not worse.

With up-to-date digital records throughout the year:

There is no January panic to gather records
Tax liabilities are predictable throughout the year
Getting paid is faster with professional digital invoicing
Financial decisions are better informed with real-time data

April 2026 is the start of a better relationship with your business finances. InvoiceGuru is purpose-built for this transition — combining professional invoicing, expense tracking, and full MTD compliance in one mobile app that makes following this action plan straightforward. The action plan above will get you there with confidence.