Making Tax Digital has already shaken things up for VAT-registered businesses and those earning £50k or more. Now, it’s turning its attention to self-employed individuals and landlords who are earning more than £30,000; the clock is ticking.

From April 2027, a significant change is coming that will affect how you record your income, manage your finances, and submit information to HMRC. The good news? There’s still time to prepare. The even better news? You don’t have to figure it out alone.

So, What Exactly Is Changing?

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC’s initiative to move the UK tax system online. The goal is to make tax reporting more accurate, more frequent, and in theory, less stressful at year-end.

Here’s the rollout timeline:

• April 2027 — The threshold drops to £30,000 - based on your 2025/26 tax year
• April 2028 — The threshold drops further to £20,000 - based on your 2026/27 tax year

If you’re earning more than £30,000 from self-employment or property, or a combination of both, April 2027 is your date to prepare for.

What Will MTD for ITSA Actually Require You to Do?

Under the new rules, you’ll need to:

1. Use compatible software

HMRC-approved software will be required to keep digital records of your income and expenses. Spreadsheets alone won’t cut it (unless they’re linked to compatible bridging software).

2. Submit quarterly updates

Instead of one annual tax return, you’ll submit four quarterly updates to HMRC throughout the year. These aren’t full tax returns, they’re summaries of your income and expenses for each quarter.

3. Submit an End of Period Statement (EOPS)

At the end of the tax year, you’ll finalise your figures and confirm they’re accurate through an End of Period Statement.

4. Submit a Final Declaration

This replaces the Self Assessment tax return and pulls everything together, including any other income sources to calculate your final tax liability.

Why Is HMRC Doing This?

The official reasoning is to reduce errors, close the tax gap (the difference between what’s owed and what’s actually paid), and make the tax system easier to manage over time. By capturing data quarterly rather than annually, HMRC hopes to give taxpayers a clearer, more real-time view of what they owe, avoiding any nasty surprises in January.

Whether you love or loathe the idea, it’s happening. The question is simply how prepared you’ll be when it does.

Who Needs to Pay Attention?

You’ll be affected if you’re:

• Self-employed - sole traders, freelancers, contractors earning over £30,000
• A landlord - with rental income over £30,000
• Both - if your combined self-employment and property income exceeds £30,000

It’s worth noting that this is gross income, not profit. So even if your outgoings are high and your profit is modest, if your income before expenses crosses the threshold, MTD for ITSA applies to you.

Common Concerns — Answered

“I already use an accountant. Do I still need to worry?” Your accountant can still manage submissions on your behalf, but you’ll need to ensure your records are being kept digitally throughout the year. It’s a shift in how the process works, not just who does the filing.

“I’m not very tech-savvy. Is this going to be complicated?” MTD-compatible software is designed to be straightforward. Many platforms already used by small business owners, like QuickBooks and Xero are MTD compatible.

“What if I miss a quarterly submission?” HMRC is introducing a new penalty points system under MTD. Each missed or late submission earns a point, and once you reach the threshold, a financial penalty kicks in. Consistency throughout the year will matter more than ever.

“I rent out one property, does this really apply to me?” If your rental income exceeds £30,000 in the 2026/27 tax year or later, yes. Many landlords with a single property in higher-value areas will fall into scope. It’s worth reviewing your figures now to understand where you stand.

What Should You Be Doing Right Now?

April 2027 might feel a long way off, but getting ahead of this will save you a lot of stress.

Here’s a practical starting point:

1. Check your income - Review your last tax return. Are you already above £30,000? Are you close to the threshold?
2. Review your current record-keeping -  Are you keeping records digitally already, or is everything in a folder at the end of the year?
3. Talk to your bookkeeper - This is exactly the kind of change your bookkeeper can help you navigate. Understanding how it affects your specific situation is the first step.
4. Start exploring software options -  If you’re not already using accounting software, now is a great time to look at what’s available.
5. Don’t wait until 2027 - The businesses that make the transition smoothly will be the ones who start preparing early.

How Bluebells Bookkeeping Can Help

Change in the tax world can feel overwhelming, but it doesn’t have to be. At Bluebells Bookkeeping, we’re here to help you understand what MTD for IT means for your situation, whether you’re self-employed, a landlord, or both.

From helping you choose the right software to supporting you through those quarterly submissions, we’ll make sure you’re ready well before April 2027 arrives.

Want to get ahead of MTD? Get in touch today and let’s start planning.