The clock is ticking. For many small businesses and self-employed individuals across the UK, April 2026 marks a major shift in how income is reported to HMRC. Making Tax Digital for Income Tax Self Assessment (MTD ITSA) isn’t just a new way to file — it fundamentally changes how often and how digitally you manage your tax affairs.
At CheckTheBooks, we know that tax changes can feel overwhelming. But with the right understanding, preparation, and expert support, MTD ITSA doesn’t have to be stressful.
What Is MTD ITSA and How Will It Change Things?
Say goodbye to the once-a-year scramble. MTD ITSA introduces ongoing digital record-keeping and regular reporting throughout the tax year.
The Key Changes
Digital Record Keeping
You must keep your business records digitally using MTD-compatible software. Spreadsheets are allowed only if they are digitally linked to HMRC via approved bridging software. Manual re-keying of figures is not permitted.
Quarterly Updates
Instead of one annual submission, you’ll send four quarterly updates summarising your income and expenses. These updates do not calculate tax — they are reporting snapshots, not tax bills.
End of Period Statement (EOPS)
After the fourth quarterly update, you’ll submit an EOPS to finalise your business figures and make accounting adjustments (such as accruals or capital allowances).
Final Declaration
This replaces the current Self Assessment tax return. It confirms your total income from all sources, applies reliefs and allowances, and finalises your tax position. The deadline remains 31 January following the end of the tax year.
Who Is Affected and When?
- From 6 April 2026:
Individuals with combined self-employment and/or property income over £50,000 must comply. - From April 2027:
The threshold drops to £30,000.
Key Risks Small Business Owners Should Watch Out For
1. The “Digital Linking” Requirement
The Risk
HMRC requires a full digital audit trail. Copying and pasting figures between systems breaks compliance.
What to Watch For
Software claiming to be “MTD-ready” but still requiring manual data entry.
Expert Help?
Yes. Accountants ensure systems are properly linked and compliant from day one — avoiding penalties later.
2. The New Penalty Points System
The Risk
Late submissions earn penalty points. Once a threshold is reached, fines apply. Points remain active for up to two years.
What to Watch For
Missing quarterly deadlines — even accidentally.
Expert Help?
Yes. Accountants manage deadlines, receive HMRC notices, and can challenge penalties where appropriate.
3. Basis Period Reform & Overlap Relief
The Risk
If your accounting year didn’t previously end on 31 March or 5 April, you may have been taxed on more than 12 months of profits during the 2023/24 transition year.
What to Watch For
Confusing or unexpectedly high tax bills relating to that transition year.
Expert Help?
Absolutely essential. Calculating and applying Overlap Relief is technical and errors can mean paying tax twice on the same profits.
4. The Final Declaration Trap
The Risk
Quarterly updates are not final. Many valuable reliefs can only be claimed in the Final Declaration.
What to Watch For
Missing claims such as capital allowances, mileage, training costs, or professional subscriptions.
Expert Help?
Yes. This is where accountants add real value by legally reducing your tax bill.
5. Choosing the Right Software
The Risk
The market is crowded, and the wrong choice can mean overpaying or struggling with compliance later.
What to Watch For
Paying for features you don’t need — or software that won’t scale with your business.
Expert Help?
Yes. Accountants can recommend suitable software and often provide access at discounted rates.
Don’t Navigate MTD ITSA Alone
April 2026 may seem distant, but preparation takes time — especially with digital systems and historic adjustments.
At CheckTheBooks.com, we connect you with qualified finance professionals who are MTD ITSA-ready. They can help you:
- Assess your MTD obligations
- Set up compliant software
- Handle Basis Period Reform and Overlap Relief
- Manage quarterly updates and final declarations
- Maximise allowable tax reliefs
- Act as your trusted guide through the transition
Sources:
Extension of Making Tax Digital for Income Tax Self Assessment
Check if and when you need to use Making Tax Digital for Income Tax
Sign up for Making Tax Digital for Income Tax
Ready to prepare for MTD ITSA with confidence?
Find your MTD expert on CheckTheBooks.com today.