The biggest change to UK personal tax in a generation is already here
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) went live on 6 April 2026. Phase 1 is not a pilot, not a soft launch, and not optional. Sole traders and landlords with gross income above £50,000 from self-employment or property are now legally required to keep digital records and submit quarterly updates to HMRC using compatible software.
If your practice has not already moved affected clients onto a compliant workflow, the first quarterly deadline is 5 August 2026. That is weeks away, not months.
This post sets out exactly where things stand, what is coming next, and the practical steps your practice should be taking right now.
The MTD ITSA rollout at a glance
The mandation schedule is phased, but the pace is accelerating. Here is how the timeline looks:
- April 2026 (live now): Sole traders and landlords with gross income above £50,000 must use MTD-compatible software and file quarterly updates.
- April 2027: The threshold drops to £30,000, pulling a significant additional portion of your personal tax client base into the regime.
- April 2028: The threshold drops again to £20,000, bringing in an estimated 900,000 further taxpayers.
HMRC is using 2024/25 Self Assessment returns to identify who falls into Phase 1. That identification work has already been done. Clients in scope are in scope now.
What quarterly reporting actually means for your practice
MTD ITSA is not simply a different way of doing the same annual return. It is a structural change to the volume and frequency of compliance work flowing through your practice.
Each affected client now requires four quarterly updates per tax year, an End of Period Statement, and a Final Declaration. For a practice managing 80 self-employed clients or landlords, that is a potential 320 additional submissions per year before you account for the annual filings.
The key quarterly deadlines for the current tax year are:
- 5 August 2026 covering April to June income and expenses
- 5 November 2026 covering July to September income and expenses
- 5 February 2027 covering October to December income and expenses
- 5 May 2027 covering January to March income and expenses
Miss these deadlines and your clients face penalties. Miss them repeatedly and your practice's reputation takes the hit.
The Phase 2 problem you need to solve today
April 2027 is eight months away. That may feel comfortable, but practices that wait until late 2026 to start preparing for the £30,000 threshold will not have enough time.
Consider the steps involved for each newly in-scope client: identifying them from your client list, reviewing their current bookkeeping arrangements, migrating them to MTD-compatible software if they are not already on it, obtaining agent authorisation, setting up digital record-keeping, and training them on quarterly submission requirements. Multiply that by the number of clients you expect to enter Phase 2, and the preparation window is tight.
The practices that will handle Phase 2 smoothly are the ones starting their client reviews now, not in January 2027.
Five practical steps for your practice this month
- Audit your client list against the Phase 1 threshold. Pull every client with self-employment or property income and check whether their 2024/25 gross income exceeded £50,000. These clients are in scope now and should already be filing quarterly.
- Identify your Phase 2 cohort. Run the same exercise for clients between £30,000 and £50,000. These clients need to be onboarded to MTD-compatible software and processes before April 2027.
- Review your software setup. Your tax software must be HMRC-recognised and MTD-ready. If it is not handling quarterly submissions smoothly, now is the time to address that gap.
- Update your client communications. Many clients will not understand what quarterly reporting means for them in practical terms. A clear, proactive letter or email explaining their obligations, your process, and any change to your fee arrangement will reduce confusion and protect your relationship.
- Revisit your pricing. MTD ITSA increases the volume of work per personal tax client considerably. Practices that absorb this additional work within existing fee structures will erode their own margins. Review and update your engagement letters accordingly.
How TaxCalc supports your MTD ITSA workflow
TaxCalc is HMRC-recognised and fully MTD-ready. The MTD Quarterly Filer lets you prepare and submit quarterly updates directly to HMRC from within the same platform you use for annual tax return production, keeping data connected and reducing the risk of errors from rekeying.
Because TaxCalc brings tax production, accounts, and practice management together in one place, your team can track MTD deadlines alongside all other client work, automate client reminders, and maintain a clear view of which submissions are outstanding at any point in the quarter.
If you are currently managing MTD ITSA submissions across disconnected tools or spreadsheets, the administrative overhead will only grow as Phase 2 brings more clients into scope. A joined-up workflow now will save significant time before April 2027 arrives.
The opportunity inside the obligation
It would be easy to frame MTD ITSA purely as a compliance burden. But quarterly touchpoints with clients create something most practices have always wanted: more regular, more meaningful conversations about clients' financial positions.
A client who is sharing income and expense data four times a year is a client you can advise on tax planning, cash flow, and business decisions throughout the year, not just in January. The practices growing most strongly right now are those treating MTD as a platform for advisory services, not just a reporting requirement.
The compliance obligation is unavoidable. The opportunity to build deeper, more valuable client relationships alongside it is entirely yours to take.
