MTD for ITSA in 2025: The Complete Preparation Guide for Freelancers and Landlords

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is one of the most significant changes to the UK tax system in decades. Designed to modernise how individuals report their income, it replaces the once-a-year tax return with quarterly digital submissions and an end-of-year finalisation.

For freelancers, sole traders, and landlords, 2025 is the year to get your systems in place. The first mandatory group starts in April 2026, followed by a second group in April 2027.

📅 Who Will Be Affected and When

• From April 2026:
  Self-employed individuals and landlords with combined qualifying income of £50,000 or more.
• From April 2027:
  Self-employed individuals and landlords with combined qualifying income between £30,000 and £50,000.
• Partnerships:
  Not yet included in these dates.

💡 Tip: “Combined” means the total of all self-employment and property income, not per business or per property.

🆕 What Is Changing Under MTD for ITSA?

1. Digital record-keeping
   You must use HMRC-compatible software for keeping records of income and expenses. Basic spreadsheets alone won’t work unless linked via a compliant “digital bridge.”

2. Quarterly updates
   Every three months, you’ll send HMRC a summary of income and expenses. This is for information only—tax is not paid quarterly.

3. End of Period Statement (EOPS)
   After the tax year ends, you submit any year-end adjustments such as allowances, reliefs, and corrections.

4. Final Declaration
   This replaces the old annual Self Assessment return for MTD sources, confirming all your reported income for the year.

✅ 2025 Preparation Checklist

1. Check your income band

   • £50k+ combined: April 2026 start
   • £30k–£50k: April 2027 start

2. Choose MTD-compatible software
   Look for features like:

   • Direct quarterly submissions to HMRC
   • Bank feeds for automation
   • Receipt scanning via mobile app
   • Multi-income source management

3. Tidy your chart of accounts
   Align income and expense categories with HMRC reporting boxes.

4. Separate your finances
   Use a dedicated business bank account to avoid mixing personal and business transactions.

5. Digitise all paperwork
   Store invoices and receipts electronically—avoid paper storage.

6. Run a trial quarter in 2025
   Submit a mock update to spot errors before going live.

7. Agree filing responsibilities
   If you have an accountant, confirm deadlines and grant them software access.

8. Set reminders for quarterly submissions

   • Q1 (Apr–Jun): due 5 Aug
   • Q2 (Jul–Sep): due 5 Nov
   • Q3 (Oct–Dec): due 5 Feb
   • Q4 (Jan–Mar): due 5 May

⚠️ Common Pitfalls to Avoid

• Mixing business and personal spending.
• Using spreadsheets without a digital bridge.
• Switching accounting methods mid-year.
• Reporting property income incorrectly.

📌 What to Do This Month

• Shortlist and test at least two MTD-compatible software options.
• Import a sample from your 2024/25 accounts to check formatting.
• Enable bank feeds for real-time transaction capture.
• Start a weekly 30-minute bookkeeping habit.

❓ Frequently Asked Questions

Do I pay tax quarterly under MTD?
No. Quarterly updates are informational only. Your payment deadlines remain the same unless HMRC changes the rules.

Can my accountant file for me?
Yes. Grant them access in your software and authorise them in HMRC’s system.

What if my income drops below the threshold?
You may fall outside the mandate for that year, but it’s best to keep digital records to avoid disruption if thresholds change.

📞 Need Expert Help?

Skyie Global can:

• Select and set up MTD-ready software
• Clean your bookkeeping data
• Guide you through your first quarterly update

Contact us today:

• 📧 Email: hello@skyieglobal.co.uk
• 📱 Phone/WhatsApp: +44 7882 348 898