Step-By-Step Guide to MTD ITSA for Individuals [Checklist Included]
![Step-By-Step Guide to MTD ITSA for Individuals [Checklist Included]](https://figsflow.com/wp-content/uploads/2025/05/image-3.jpg)
Starting April 2026, over 4 million landlords and self-employed individuals will need to comply with Making Tax Digital for Income Tax Self Assessment, i.e. MTD ITSA for individuals. This means quarterly submissions, digital record keeping, End of Period Statement (EOPS) and final declaration.
We know it feels overwhelming, but it doesn’t have to be.
In this blog post, we will walk you through 8 actionable steps to help you successfully transition to MTD and stay on top of your obligations. Plus, we will throw in a handy checklist at the end so that you can track your progress with ease.
Step 1: Understand What MTD ITSA for Individuals Means
Before diving into the details, it is important to grasp the basics.
So, what exactly is MTD for ITSA?
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is a part of HMRC’s MTD initiative to transform the tax system in UK. Under this initiative, taxpayers will need to:
- Keep digital records of income and expenses
- Submit quarterly updates to HMRC through HMRC compatible software
- Submit an end-of-period statement and a final declaration to confirm tax position
This means no more paper filing, and no more once-a-year filing. You will be reporting HMRC throughout the year.
With MTD for ITSA, HMRC would benefit with real-time access of your tax position, and you would benefit with fewer end-of-year surprises.
Step 2: Check If You Need to Follow the New Rules
![Step-By-Step Guide to MTD ITSA for Individuals [Checklist Included]](https://figsflow.com/wp-content/uploads/2025/05/Timeline-for-MTD-for-ITSA-1.jpg)
You will need to comply with MTD for ITSA if:
- You are self-employed or a landlord
- Your total trading and property income is over £50,000 per annum (for 2026 onwards)
- You are not part of the excluded group (more on that shortly)
Who Are Excluded from MTD for ITSA?
- Self-employed individuals and landlords earning between £30,000 to £50,000 are not required to follow MTD for ITSA until April 2027
- Individuals with disabilities or a reasonable excuse for not being able to use digital tools may be exempt
How To Check Your Eligibility?
- Review your Income – If your combined income from self-employment and property exceeds the threshold of £50,000 and £30,000
- Verify if You’re Excluded – Check official guidelines from HMRC to make sure if you are excluded.
Pro Tip:
Even if you don’t fall under MTD for ITSA now, keep an eye on any future announcements. HMRC might update the threshold and expand the scope of MTD to include more taxpayers over time.
Step 3: Find Out What You Need to Sign Up
To sign up, you will need:
- MTD Compatible Software – Choose a software that can record income and expenses and submit quarterly updates and End of Period Statement (EOPS) to HMRC.
- Right Information – When signing up, you will need details including:
- Your Government Gateway user ID and password
- Your business name and start date
- Your National Insurance number
- Your accounting period details
- The software you plan to use
Pro Tip:
Don’t wait until the last minute. Start preparing now for a successful transition.
Step 4: Choose MTD-Compatible Software
To comply with MTD ITSA for Individuals, you will need to switch from using paper records or basic spreadsheets to digital record keeping in MTD-compatible software.
What is MTD-Compatible Software?
It is a software that is capable of:
- Keeping digital records of income and expenses
- Generating and submitting quarterly updates to HMRC
- Preparing and submitting your End of Period Statement (EOPS) and Final Declaration
You can find the comprehensive list of HMRC-approved software at the official GOV.UK site.
Pro Tip:
Try out different MTD-compatible software before you are legally required to use them.
Step 5: Keep Digital Records of Your Income & Expenses
Under the MTD initiative, you will need to record all your income and expenses digitally using MTD-compatible software.
What Does Digital Record Keeping Look Like in Practice?
Previously, you could keep paper receipts or spreadsheets of your income and expenses and file Self Assessment online or via paper return. But with the introduction of MTD, your records must be:
- Stored digitally
- Properly organised (by transaction not monthly summaries)
- Linked to your quarterly and end of the year submissions
What Do I Need to Record?
- All business-related income and allowable expenses like sales, rent-received, commissions, office supplies, mileage, software subscriptions etc. along with relevant date
- Amount received or paid
- VAT details, if applicable
Pro Tip:
Don’t panic. MTD-compatible tools make this process easy. You can upload receipts, connect your bank accounts and use mobile apps to log expenses in real time.
Step 6: Send Quarterly Updates to HMRC
MTD for ITSA, including MTD ITSA for individuals, replaces end of the year tax return with quarterly updates throughout the year. This gives HMRC real-time view of your tax position.
What Are Quarterly Updates?
Quarterly updates are summarised reports of your income and expenses for each quarter (every 3 months). Each updates includes:
- Your total income and allowable expenses
- Rough estimate of your tax position (your actual tax bill is calculated later)
You need to submit these quarterly reports to HMRC using MTD compatible software.
What Are the Deadlines?
Quarterly updates are due on one month after the end of each quarter. For most people, these quarters follow the standard tax year.
Pro Tip:
You don’t need finalised figures in quarterly updates. Just make sure they are accurate to the best of your knowledge. You will confirm everything in the EOPS and Final Declaration.
Step 7: Submit Your EOPS & Final Declaration
After you submit all your quarterly updates for the year, you will need to submit End of Period Statements (EOPS) and the Final Declaration to complete your tax obligation.
What is EOPS?
EOPS lets you confirm all the figures you have submitted throughout the year are accurate. This is where you:
- Review and finalise your income and expenses
- Make year-end adjustments
What About Final Declaration?
Final declaration is the replacement of your traditional Self Assessment Tax Return. This is where you:
- Declare all your income
- Confirm that the information HMRC has received is complete and correct
- Submit your final tax position by 31 January following the end of the tax year
Pro Tip:
The process is easier than it feels on the outset. Most MTD software will guide you through both submissions. Just make sure all your inputs are accurate and complete. HMRC uses this information to determine your actual tax bill.
Step 8: Avoid Penalties by Staying Compliant
Under MTD for ITSA, HMRC has introduced a new points-based penalty system. This new penalty system will penalise repeated non-compliance rather than one off errors.
What Counts as Non-Compliance?
- Missing a quarterly update
- Failing to keep digital records
- Not using MTD compatible software
- Late submission of EOPS (End of the Period Statement) and Final Declaration
Each missed deadline earns you a penalty point. Once you reach a certain point threshold (based on your submission frequency), you will face financial penalties.
How Many Penalty Points Before You Are Penalised?
Here’s the points threshold before the financial penalty kicks in.
Once you hit the threshold, every additional missed deadline triggers £200 penalty until your record is clean
How Do You Stay on Track?
- Use reminders and calendars alerts for deadlines
- Update software in real time
- Check your points balance through your HMRC digital account
Bonus: Use This Checklist to Stay on Top of Everything
Now that you have made it through the full MTD ITSA for individuals journey, it’s time to keep everything in one place with actionable checklist you can refer to throughout the year.
This is not just a to do list but a step-by-step reminder of what to do, when to do and how to do for successful MTD transition. You can use it to:
- Avoid the common pitfalls
- Know exactly what needs to be done and when
- Stay on top of MTD for ITSA obligations
Whether you are a self-employed individual or landlord, this checklist will guide you through successful transition to MTD for ITSA.
Sandeep Subedi
Sandeep is a rising finance professional with a sharp eye for numbers and a passion for turning complex tax rules into simple and smart solutions. Currently pursuing an ACCA qualification, he specialises in helping businesses stay regulatorily compliant.
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