Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will apply from 6 April 2026 to sole traders and unincorporated landlords with combined trading and property income in 2024/25 of at least £50,000.
Under making tax digital for ITSA, traders and landlords must keep digital records and make digital returns to HMRC using Making tax digital-compatible software.
A digital record is a record of income and expenses that is created and stored in software that works with MTD for ITSA. Under MTD for ITSA, a trader must keep digital records of their trading income and expenses, and an unincorporated landlord must keep digital records of their property income and expenses. If a trader or landlord has other income, there is no need for them to keep records of that income digitally.
Software
Traders and landlords within MTD for ITSA will need to use software that either creates digital records and submits information to HMRC or software which connects to the trader or landlord’s own record-keeping software, such as a spreadsheet. This type of software is known as bridging software.
Taxpayers can choose a single product that meets all their needs or a number of products that work together. Where more than one product is used, they must link digitally. For example, it is acceptable to keep records in a spreadsheet which is linked digitally to software to submit information to HMRC. However, it is not acceptable to manually enter or cut and paste data from a spreadsheet into a software package.
Records that must be kept digitally
The following records must be kept digitally:
- self-employment income, such as sales, takings and fees;
- self-employment expenses, such as the cost of goods, travel costs, office costs, rent, etc.;
- property income, such as rent, lease premiums, reverse premiums and inducements; and
- property expenses, such as repairs, maintenance, travel, etc.
The amount, the date the income was received or payment made and the nature of the income or expense should be recorded. The income and expenditure categories for MTD for ITSA are the same as for the Self-Assessment tax return.
If a trader has more than one business, they will need to keep the details for each business separately and make separate quarterly returns for each business. Landlords should keep separate records for their UK and foreign property businesses.
Jointly let properties – what they should keep as digital records for MTD
Where a landlord has income from a jointly let property, they only need to keep digital records relating to their share of the income and expenses. Landlords with income from jointly let properties can opt to keep less detailed records or to exclude income from jointly let properties in their quarterly updates; the income is instead included when the position for the tax year is finalised.
Turnover below the VAT threshold
If a trader’s turnover from a single self-employment is £90,000 or less, they only need to record whether a transaction is income or an expense. More detail is not required.
Landlords with income from residential letting need to record whether a transaction is an income or an expense and, where it is an expense, whether it is a restricted finance cost.
Once income reaches £90,000, transactions must be fully categorised.
Retailers
Retailers can create a digital record of gross daily takings rather than having to record each individual sale.
Storing digital records for MTD
Digital records must be kept for at least five years from the 31 January submission date for the tax year in question, i.e. for 2026/27, until 31 January 2033.
