Making Tax Digital for Income Tax (MTD ITSA) is HMRC's programme that requires self-employed individuals and landlords to keep digital records and submit income and expense summaries directly to HMRC four times a year — instead of a single annual Self Assessment return.
The programme has been in development for several years. The first cohort — those earning over £50,000 — became subject to the rules from 6 April 2026. MTD ITSA is now live, not a future obligation.
Bottom line: If you are self-employed or a landlord and your qualifying income is over £50,000, you are legally required to be using MTD-compatible software and filing quarterly updates right now.
MTD ITSA applies to individuals who file a Self Assessment tax return and have qualifying income above the relevant threshold. Qualifying income includes:
Employment income, dividends, and pension income do not count towards the qualifying income threshold — only self-employment and property income.
Note: The thresholds apply to qualifying gross income — not profit. A landlord receiving £52,000 in rent even with significant expenses is above the £50,000 threshold and must comply from April 2026.
Self-employed individuals and landlords with qualifying income over £50,000 must keep digital records and submit quarterly updates. This cohort is already in scope and must be using compatible software.
The obligation extends to those with qualifying income over £30,000. This will bring millions more sole traders and landlords into scope. Starting early is strongly recommended.
HMRC has indicated the threshold will eventually drop to £20,000, but no firm date has been announced. Legislation will confirm the exact date.
Instead of a single annual return, MTD ITSA requires four quarterly updates per tax year. Each update is a summary of your income and expenses for that 3-month period. The quarters follow the standard UK tax year (6 April to 5 April), and each update is due within one month of the quarter end.
Margin auto-files quarterly updates at 08:00 each morning — so you never have to manually trigger a submission. Enable auto-filing once, and Margin handles it every quarter, on time. If your books aren't ready — for example if transactions are uncategorised — Margin holds the filing and shows a warning on your dashboard so you can act before the deadline. It will never file an incomplete return.
After the fourth quarterly update, you complete two final steps:
Margin handles all three stages — quarterly updates, EOPS, and Final Declaration — from a single dashboard, with built-in error recovery for every HMRC error code.
| Before MTD ITSA | Under MTD ITSA |
|---|---|
| One annual Self Assessment return in January | Four quarterly updates throughout the year |
| Paper or spreadsheet records acceptable | Digital records required (HMRC-compatible software) |
| Tax bill known in January for prior year income | In-year estimate visible throughout the year |
| Deadline is 31 January for online filing | Quarterly deadlines spread through the year |
| Single annual payment on account system | Payments on account system continues alongside MTD |
Not necessarily. MTD ITSA is designed to be manageable with the right software, even if you handle your own books. Margin is built specifically for sole traders and landlords who want to stay compliant without relying on an accountant for every submission.
If you do work with an accountant, the Margin Accountant plan lets them manage all your filings from a dedicated practice dashboard — including reviewing your records and submitting on your behalf.
HMRC requires software that can:
Margin meets all of these requirements. It connects directly to HMRC via the MTD API — no bridging software, no spreadsheets, no manual portal entry. You authorise Margin once, and all subsequent submissions go direct.
HMRC's new points-based penalty system applies to MTD ITSA. Each missed quarterly update earns a penalty point. When your points reach the threshold (4 for quarterly filers), a £200 fixed penalty is charged and points accumulate with further failures. Additional daily penalties apply for prolonged non-compliance. There is also a separate penalty for a late Final Declaration.
The best protection against penalties is automated filing. Margin's auto-filing feature submits quarterly updates each morning when they fall due — so you accumulate no points even if you forget to log in.
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