MTD ITSA COMPLETE GUIDE
Making Tax Digital for Income Tax
A practical guide to the three phases, qualifying income and the digital reporting duties for sole traders and individual landlords.
Your MTD verdict
Qualifying income
£52,000 / year
Checking live mandation date…
- Phase
- P1
- Income test
- Strictly over £50,000
- HMRC tests
- 2024/25 Self Assessment return
HMRC normally tests qualifying income using the previous tax year’s Self Assessment return.
What you must do
- Keep digital records
- Send 4 quarterly updates a year (deadlines 7 Aug, 7 Nov, 7 Feb, 7 May) via MTD-compatible software
- Submit a final declaration by 31 January after the tax year (replaces the Self Assessment tax return)
Key scope notes
- Qualifying income means combined GROSS income from self-employment (turnover) + property (rental), before expenses.
- Excluded: employment / PAYE wages, dividends, company director salary, company-held (incorporated) property income.
- Partnerships have a separate MTD timeline — not covered here.
- Jointly-owned property and multiple businesses can require additional review.
General information, not tax advice. Check GOV.UK / your accountant.
The three mandation phases
| Phase | Qualifying income | From | Tested on |
|---|---|---|---|
| 1 | Over £50,000 | 6 April 2026 | 2024/25 return |
| 2 | Over £30,000 | 6 April 2027 | 2025/26 return |
| 3 | Over £20,000 | 6 April 2028 | 2026/27 return |
What counts as qualifying income?
Add combined gross self-employment turnover and property rental income before expenses. Employment/PAYE wages, dividends, company director salary and incorporated property income are excluded.
What mandated people must do
- Keep digital records
- Send four quarterly updates through MTD-compatible software
- Submit a final declaration each year
Scope and exemptions
Partnerships have a separate timeline and are not covered here. Digital-exclusion exemptions may apply; the stated route is to contact HMRC by phone or in writing.
Related guides
Sole traders · Landlords · Thresholds · Quarterly updates
Frequently asked questions
Who is MTD for Income Tax for?
This version covers sole traders and individual unincorporated landlords.
How is qualifying income calculated?
Add gross self-employment turnover and gross property income before expenses.
When does Phase 1 begin?
6 April 2026 for qualifying income over £50,000.
What income is excluded?
PAYE wages, dividends, company director salary and company-held property income.
Can someone claim digital exclusion?
The stated exemptions include inability to go digital; apply to HMRC by phone or in writing.
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