Picture this: you’re a self-employed plumber in Swindon, juggling invoices between call-outs, and HMRC has just decided your spreadsheet isn’t good enough anymore. From 5 April 2026, millions of sole traders and landlords will need to file their tax returns digitally, every quarter, through approved software. Welcome to Making Tax Digital for Income Tax Self Assessment – or MTD for ITSA, if you enjoy acronyms that sound like a particularly awkward sneeze.

The change represents the biggest shake-up to self-assessment since it launched in 1996. For some, it’s a long-overdue modernisation. For others, it’s another layer of bureaucracy in an already complicated.

The Practical Reality for Small Businesses

Let’s be honest: quarterly reporting sounds neat in a policy document, but it’s another matter entirely when you’re running a one-person business from your kitchen table.

Software will be essential, but that doesn’t mean abandoning your spreadsheets entirely. If you’re wedded to Excel or Google Sheets, you can keep using them – but you’ll need what’s called ‘bridging software’ to submit your figures to HMRC. Think of it as a digital translator between your spreadsheet and HMRC’s systems. You prepare your records as usual, then the bridging software formats and files them properly.

For those who prefer an all-in-one solution, compatible accounting software handles everything from record-keeping to submission. Some packages are free, others aren’t. Either way, there’s a learning curve.

For accountants, MTD for ITSA represents both an opportunity and a headache. Many sole traders will need professional help, at least initially. That means more work for practices already stretched thin during January’s self-assessment rush.

Then there’s the time factor. Submitting quarterly updates doesn’t take long once you’re in the rhythm, but getting into that rhythm requires discipline. Miss a quarter, and you’re scrambling. Let your records slip, and you’re in trouble.

Critics argue this disproportionately affects smaller businesses. A limited company already files quarterly VAT returns and annual accounts. For a sole trader earning £50,000, quarterly reporting feels like busywork – especially if they’re used to doing everything themselves.

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Why HMRC Thinks This Is a Good Idea

The official line from HMRC is all about accuracy and simplicity. By moving to quarterly updates, they argue, taxpayers will keep better records, make fewer mistakes, and avoid nasty surprises when the annual bill arrives.

There’s also a less publicised benefit for HMRC itself: real-time visibility of the tax base. Instead of waiting until January to see what everyone earned last April, they’ll have a rolling picture of the economy. That’s useful for forecasting and for spotting discrepancies early.

The government estimates that MTD will reduce errors in tax returns and eventually save businesses time. The logic is that spreading compliance throughout the year should feel less burdensome than one annual scramble.

Whether that logic survives contact with reality remains to be seen.

The Practical Reality for Small Businesses

Let’s be honest: quarterly reporting sounds neat in a policy document, but it’s another matter entirely when you’re running a one-person business from your kitchen table.

Software will be essential. You can’t simply email HMRC a spreadsheet or scribble figures on the back of an envelope anymore. You’ll need compatible software that bridges your records with HMRC’s systems. Some packages are free, others aren’t. Either way, there’s a learning curve.

For accountants, MTD for ITSA represents both an opportunity and a headache. Many sole traders will need professional help, at least initially. That means more work for practices already stretched thin during January’s self-assessment rush.

Then there’s the time factor. Submitting quarterly updates doesn’t take long once you’re in the rhythm, but getting into that rhythm requires discipline. Miss a quarter, and you’re scrambling. Let your records slip, and you’re in trouble.

Critics argue this disproportionately affects smaller businesses. A limited company already files quarterly VAT returns and annual accounts. For a sole trader earning £50,000, quarterly reporting feels like busywork – especially if they’re used to doing everything themselves.

What You Need to Do Now

If MTD for ITSA applies to you, the clock is already ticking. Waiting until March 2026 to sort this out would be unwise.

First, check whether you’re caught by the £50,000 threshold. That’s gross income, not profit, so it’s easier to exceed than you might think. If you’re close to the line, consider whether you’ll cross it in the 2026-27 tax year.

Next, choose your software. HMRC publishes a list of compatible providers, ranging from free basic options to comprehensive paid platforms. If you already use accounting software, check whether it’s MTD-ready. Many popular packages are updating to comply, but not all.

Get your records in order. Digital doesn’t just mean computerised – it means structured and accessible. If you’ve been keeping receipts in a shoebox or tracking expenses in a random notebook, now’s the time to tidy up.

Finally, consider getting professional advice. An accountant can help you choose software, set up systems, and understand what needs reporting each quarter. The upfront cost might sting, but it’s cheaper than getting it wrong.

The Bigger Picture

MTD for ITSA sits within a broader government push towards digital tax administration. VAT-registered businesses have already gone through this process, and most adapted without catastrophe. But VAT traders tend to be more established and already use software. The self-employed population is different – more varied, more casual, more reliant on paper.

There’s also a philosophical question lurking here. Is this really simplification, or just shifting complexity around? Quarterly reporting might reduce year-end stress, but it creates ongoing admin. For some, that trade-off works. For others, it’s just more hassle.

HMRC insists the system will improve over time, with better software and clearer guidance. That’s possible. It’s also possible that April 2026 will be messy, as millions of people try to get their heads around a new system all at once.

A Quiet Revolution

Tax rarely inspires passion, but it affects everyone. MTD for ITSA won’t make headlines, yet it’ll touch millions of lives. For some sole traders and landlords, it’ll be a smooth transition. For others, it’ll be a headache that never quite goes away.

The one certainty is that ignoring it isn’t an option. HMRC has made clear that compliance isn’t voluntary, and penalties will apply for those who fail to keep up. That’s not a threat, just a fact.

So if you’re self-employed, earn rental income, and your figures are anywhere near the threshold, it’s time to start paying attention. April 2026 isn’t that far away. And unlike most tax deadlines, this one comes with a whole new rulebook.

Better get reading.