MTD Income Tax
Written by
Ray Coman
Making Tax Digital for Income Tax (often shortened to “MTD ITSA”) is a change in how HMRC collect information from landlords and sole traders.
It does not change the underlying tax rules, but it does change the reporting timetable: quarterly updates during the year, followed by an end-of-year Final Declaration (which replaces the traditional SA100 submission step, commonly referred to as the tax return) for those within MTD.
The practical deadline that matters is the first quarterly submission date: 7 August 2026.
Key sections:
What is changing (what you file)
Penalties (points-based system)
Authorising Coman & Co (new HMRC authorisation)
Digital records and software options (including bridging spreadsheets)
Who is affected (thresholds)
MTD for Income Tax applies by reference to your gross income (not profit) from self-employment and/or UK property, as shown on your tax return for the relevant year:
From 6 April 2026: gross income over £50,000 (based on 2024/25)
From 6 April 2027: gross income over £30,000 (based on 2025/26)
From 6 April 2028: gross income over £20,000 (based on 2026/27)
Gross income means total rental and/or trading income before expenses.
What is changing (what you file)
For those within MTD, the year becomes a five-submission cycle:
Four quarterly updates (summary income and expenditure updates during the year)
One Final Declaration after the tax year end (which replaces the traditional SA100 submission step, commonly referred to as the tax return)
If you also have employment, dividends, interest or other sources, these are included in the Final Declaration in the usual way.
Key dates and deadlines
Quarterly periods follow the tax year:
6 April – 5 July
6 July – 5 October
6 October – 5 January
6 January – 5 April
For clients entering from April 2026:
First quarter ends: 5 July 2026
First reminder email from Coman & Co: 6 July 2026 (the first day the report can be filed)
First submission deadline: 7 August 2026
Penalties (points-based system)
Late quarterly submissions fall under HMRC’s points-based penalty system. In brief:
Each late quarterly update results in one penalty point.
For quarterly filers, once four points are reached HMRC charge a £200 penalty.
Further late submissions after the threshold can trigger further £200 penalties. Separate penalties and interest may apply for late payment of tax.
Authorising Coman & Co (new HMRC authorisation)
If you want Coman & Co to manage MTD for you, HMRC require a new MTD authorisation. This is separate from your existing Self Assessment authorisation.
We will send a secure HMRC link. You will need to sign in using your Personal Tax Account (Government Gateway) and approve Coman & Co as your main agent for “Making Tax Digital for Income Tax”.
HMRC may ask you to confirm your identity (including via the GOV.UK ID Check app). This is normal. Authorisation links expire after 21 days.
Digital records and software options
Digital records do not necessarily mean full accounting software. Depending on your circumstances, acceptable approaches may include:
Accounting software (for example QuickBooks or Xero)
Spreadsheet records
Spreadsheet summaries based on downloaded bank transactions
Where appropriate, we can use MTD bridging software. In practical terms, this means submitting your quarterly figures from a structured spreadsheet summary of income and expenditure (often built from a spreadsheet download of your bank transactions).
We resell QuickBooks at a discount, but we can work with whatever software you choose. Direct debit is required if purchasing software through us.
Fees
If we manage your MTD quarterly reporting:
£40 + VAT per quarterly report
+ 50p + VAT per transaction where bookkeeping is required
Minimum quarterly fees:
£60 + VAT – landlord + self-employed, or self-employed + VAT
£80 + VAT – landlord + self-employed + VAT
If you take our quarterly MTD service, we apply an £80 discount to your annual tax return fee.
There is no discount for late catch-up submissions (for example, four late quarters = 4 × £40).
Next steps
If you want Coman & Co to handle your MTD quarterly reporting, complete the HMRC authorisation using the link in our email.
If you intend to manage MTD yourself, no action is required at this stage.
