Making Tax Digital for Income Tax Self-Assessment: Keep Calm and Carry On
The headlines might sound dramatic, but for most of you, it's business as usual
If you've been hearing about "Making Tax Digital for Income Tax Self Assessment" (or MTD for ITSA) and feeling a bit anxious about what it means for you, you're not alone. Your inbox might be filling up with warnings about new software and quarterly submissions that make it sound like a massive upheaval.
Good news: For most of you, there's absolutely nothing to worry about right now.
What's Actually Happening?
In simple terms, HMRC is gradually modernising how self-employed people, landlords and others submit their tax information. Instead of the traditional annual tax return, they're moving towards a system where you'll update your figures digitally throughout the year.
The goal? Fewer mistakes, less paperwork and (eventually) a smoother experience for everyone.
Who Needs to Pay Attention Right Now?
First things first—this only affects self-employed people and landlords. If you're employed (even with a side hustle under the threshold) or only have investment/interest income, you can stop reading and get on with your day!
For those who are self-employed or have rental property income, here's when MTD for ITSA kicks in:
Over £50,000 in the 2024-25 tax year? You'll need to start from 6 April 2026
Over £30,000 in the 2025-26 tax year? You'll need to start from 6 April 2027
Please note that once you move to MTD for ITSA, even if you dip below the threshold in the following years, you will remain on that system. Be reassured, there is only one changeover.
Under these thresholds? You can breathe easy, no changes needed yet. Most of our clients at 3 Little Birds Finance fall into this category, which means business as usual for the foreseeable future.
Not sure where you stand? HMRC has a handy tool: 👉 Check if you're eligible
For Those Approaching or Above the Thresholds
If you're nudging towards those income levels or already beyond them, there's no need to panic—just time to start gently preparing:
Consider cloud accounting: Tools like Xero make digital record-keeping straightforward and will seamlessly connect with HMRC when the time comes
Start small: Even just moving your basic record-keeping from spreadsheets to simple software can be a good first step
Chat with us: We can help you transition at a comfortable pace that works for your business
What Everyone Should Do (Without Stressing)
✓ Know where you stand. Check if your self-employment or rental income is approaching the thresholds. If not, relax!
✓ Keep good records. This is always good practice, MTD or not
✓ Ignore the panicky headlines. Many are aimed at larger businesses with more complex needs
✓ Trust that we've got your back. We're keeping track of all the changes so you don't have to
The Bottom Line
Making Tax Digital isn't happening overnight, and it isn't happening for everyone at once. The government has already delayed the rollout several times to ensure a smoother transition.
Rest assured that 3 Little Birds Finance will give you plenty of notice if and when you need to make any changes. Until then, we'll continue to handle your tax affairs just as efficiently as always.
We'll share relevant updates through our monthly newsletter and here on our blog. And remember—if you ever have questions or concerns, we're only a phone call or email away.
(Link to advice hour and xero service - add when I schedule it)
Your tax affairs are in safe hands—no drama required.