Making Tax Digital (MTD) is an initiative introduced by HM Revenue and Customs (HMRC) to make tax administration more efficient and effective for both taxpayers and HMRC. One component of MTD is the implementation of Making Tax Digital for Income Tax Self-Assessment (ITSA), which requires taxpayers to submit their income tax information digitally to HMRC.

From April 2026, MTD for ITSA will require all self-employed individuals and landlords with annual business or property income above £10,000 to keep digital records of their income and expenses and submit their tax returns to HMRC using approved accounting software. This means that manual record keeping and paper tax returns will no longer be allowed.

The benefits of MTD for ITSA include improved accuracy in tax reporting, reduced errors in tax returns, and a simplified tax compliance process for taxpayers. The initiative also aims to reduce the administrative burden on HMRC and improve their ability to identify tax evasion and non-compliance.

It is important for affected taxpayers to ensure that they have the necessary digital tools and software in place to comply with MTD for ITSA. HMRC has provided guidance and support to help taxpayers transition to the new digital tax system, and penalties will apply for non-compliance.

Overall, MTD for ITSA is an important initiative that will modernize the tax system in the UK and bring it in line with digital advances in other areas of business and finance.