Yes, with the same wording as for MTD VAT. Applications will not open until shortly before the first taxpayers are mandated from April 2026. Apply for an exemption from Making Tax Digital for Income Tax.

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If a taxpayer is in MTD ITSA, other income (eg, employment, pension, or investment income) does not need to be reported quarterly to HMRC. It is reported annually as part of the finalisation process in a way that is similar to (but not the same as) the self assessment tax return (and to the current self assessment deadline). There are three ways to report this other income:

• Using MTD ITSA software that has this additional functionality
• Using a different tax software product (eg, a commercial self assessment software product, upgraded to comply with MTD ITSA)
• Using an HMRC user interface that is being developed to replace the current online self assessment return

There will not be a paper option.

The current self assessment system (including the paper return) will remain available to taxpayers not in MTD ITSA but in due course may be replaced by the new user interface referred to above.

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Taxpayers with turnover of more than £50,000 are required to join MTD ITSA from April 2026. The turnover threshold reduces to £30,000 from April 2027. Taxpayers with turnover of £30,000 or less are not required to join MTD ITSA for now. The turnover test is applied to:

• Turnover/gross income (not profits)
• Turnover from self-employment and property only, added together (see below for the specific boxes on the tax return)
• Each taxpayer individually (so where there is income from jointly held property the individual’s share of that gross income per the tax return is what counts)

Income not reported on the tax return is not included for the purposes of the turnover test. Examples of this include income not reported because it is wholly covered by:

• the trading allowance;
• the property allowance; or
• qualifying care relief.

The test does not include partnership income or any other income that is not listed below:

Self-employment turnover	SA103F box 15, SA103S box 9, SA200 box 3.6
Self-employment other income	SA103F box 16, SA103S box 10
UK property income	SA105 box 20, SA200 box 6.1
Other UK property income (grant of lease)	SA105 box 22
Other UK property income (reverse premiums)	SA105 box 23
Other UK property income (FHL)	SA105 box 5
Foreign property gross income	SA106 box 14
Foreign property income (reverse premiums)	SA106 box 16

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When MTD ITSA starts in April 2026, the £50,000 turnover test will be applied to the information in the 2024/25 tax returns that are due to be filed by 31 January 2026. HMRC will automatically set up the obligations to file quarterly updates (there will be a requirement for each taxpayer, or their agent, to sign up individually).

Where a taxpayer no longer has any income from self-employment or property, they will probably need to notify HMRC that these income sources have ceased and ensure that the MTD ITSA obligations are cancelled (the process has not yet been developed). A taxpayer whose turnover/gross income exceeds £50,000 in 2024/25 but drops below £50,000 in 2025/26 will still need to comply with MTD ITSA requirements from April 2026.

When the turnover threshold reduces to £30,000 in April 2027, it will be applied to information in the 2025/26 tax returns due to be filed by 31 January 2027.

A taxpayer that breaches the turnover threshold for the first time in a tax year (including a taxpayer new to self assessment) is required to join from 6 April following the due date for the self assessment tax return for that tax year.

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A taxpayer who is in MTD ITSA and whose turnover/gross income falls below threshold for three successive tax years can claim exemption from the start of the following tax year. 

Example:

Tax year	Turnover	Notes
2024/25	£55,000	Base year so mandated for 2026/27
2025/26	£25,000
2026/27	£35,000	First mandated year
2027/28	£25,000	Second mandated year
2028/29	£25,000	Third mandated year
2029/30	£25,000	Fourth mandated year
2030/31		Not mandated as prior three tax years are all £30,000 or less (Note – this is the case despite the turnover threshold being £50,000 until April 2027)

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Quarterly updates are required for standard tax year quarters (ie, to 5 July, 5 October, 5 January, and 5 April). There is an option to elect for calendar quarters (ie, to 31 June, 30 September, 31 January, and 31 March). This does mean a bunching of agents’ workloads and any clash with the timing of VAT returns also needs to be considered. The due date for the quarterly updates is 7 August, 7 November, 7 February, and 7 May regardless of whether an election for calendar quarters has been made.

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HMRC intends to introduce MTD ITSA for partnerships but no start date has been announced. When introduced, the MTD ITSA obligations will apply to the partnership rather than individual partners. Until MTD ITSA is extended to partnerships, partners must continue to report partnership income annually along with income from other non-MTD sources.

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Each individual is required to comply with MTD ITSA requirements for their income from property. This includes their share of income from any jointly held properties. There is no form of joint reporting by property or portfolio of properties. This will create very significant practical problems for taxpayers who have different property holdings with different groups of joint owners. In some cases, the accounting may be done by different people and using different software products and the taxpayer may have great difficulty obtaining the information in time to submit the quarterly update and in complying with the requirement to have digital links from the transaction records through to submission. ICAEW has raised this as a major area of concern with HMRC.

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Separate obligations to comply apply to:

• Each separate trade (equivalent to the requirement to submit a separate SA103 for each trade)
• UK property income (equivalent to the SA105)
• Overseas property income (equivalent to the land and property section of the SA106 plus EEA furnished holiday lets)

There can be only one set of submissions (quarterly updates) for each obligation. If records relating to one obligation are held in more than one software product, they will need to be combined into one product before the submission is made to HMRC. This may be a problem where records for different divisions of the same trade or records for different properties are held in different systems.

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Quarterly updates can be amended by resubmitting them. In a change from the original design, quarterly updates are now cumulative, year to date data. This will reduce the need for quarterly updates to be resubmitted as any corrections will be picked up by the next quarterly update.

The fourth quarterly update can be amended up to the finalisation process being completed. Once the finalisation process has been completed changes will be made following a process similar to the process for amending a self assessment tax return (precise details not yet available).

It is not yet clear which adjustments need to be made by submitting a revised quarterly update for the fourth quarter and which adjustments can be made as part of the annual adjustments (BSAS) process prior to the finalisation process. HMRC’s expectation is that underlying records should be corrected rather than a journal entry being made and that the adjustments process should be used for tax and accounting adjustments only.

In particular, it is not clear how and where adjustments to reflect non-tax-year accounting dates will be made, that is another of the significant design issues that ICAEW has raised with HMRC.