{"id":18982,"date":"2026-07-15T10:46:02","date_gmt":"2026-07-15T05:16:02","guid":{"rendered":"https:\/\/befreeltd.com\/uk\/?p=18982"},"modified":"2026-07-23T14:21:18","modified_gmt":"2026-07-23T08:51:18","slug":"mtd-itsa-quarterly-updates","status":"publish","type":"post","link":"https:\/\/befreeltd.com\/uk\/resources\/blogs\/mtd-itsa-quarterly-updates\/","title":{"rendered":"MTD for ITSA Three Months In: What the First Quarter Has Revealed"},"content":{"rendered":"\t\t
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MTD for ITSA became a live reporting requirement on 6 April 2026, and the first quarter of digital record-keeping under the new regime closed on 5 July. With the first quarterly update deadline now falling on 7 August 2026, firms across the UK have had a genuine test run of Making Tax Digital for Income Tax Self Assessment<\/a> in practice, not just in theory. Here is what that first quarter has actually revealed, and what it means for accountants supporting clients through the rest of the year.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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What Is MTD for ITSA?\n<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
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Making Tax Digital<\/a> for Income Tax Self Assessment (MTD ITSA) replaces the single annual Self Assessment return, for those within scope, with a system of digital record-keeping and quarterly updates submitted directly to HMRC through compatible MTD software. Instead of one large exercise at year-end, affected sole traders and landlords now report income and expense totals four times a year, followed by a Final Declaration once the tax year closes.<\/p>

The MTD ITSA<\/a> meaning, in short, is a shift from annual reporting to ongoing digital reporting. It does not change how much tax is owed. It changes when and how information reaches HMRC.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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Who Is In Scope, and What Are the MTD for ITSA Thresholds?\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t
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The current MTD for ITSA thresholds apply to sole traders and landlords with gross income (turnover before expenses) above \u00a350,000, based on their 2024\/25 Self Assessment return. This applies per person, combining self-employment and property income together, not per source. From April 2027, the threshold drops to \u00a330,000, bringing a significantly larger population of clients into scope.<\/p>

For accounting firms, this means the current cohort is really a preview. The lessons from this first quarter apply directly to the much larger group joining next year.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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What Has the First Quarter Actually Shown Practices?\n<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\tThree months in, a few consistent patterns have emerged across firms managing MTD for ITSA clients.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t
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Record-keeping habits vary far more than MTD software choice\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\tTwo clients on the same platform can produce very different quality of quarterly data, depending on how consistently they log transactions during the period rather than at the end of it. Firms report that the clients causing the most friction are not necessarily the least tech-savvy, but the least habitual.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t
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MTD Bridging software is doing more heavy lifting than expected\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t
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A meaningful number of clients are still working from spreadsheets rather than moving to cloud accounting platforms. That is permitted under MTD for ITSA HMRC rules, provided the spreadsheet links digitally to HMRC via MTD bridging software and avoids manual copy and paste. This has meant firms spending extra time making sure clients’ digital links to HMRC are truly automatic, not just manual copying dressed up to look compliant.<\/p>

Also Read: How Accounting Firms are Managing MTD ITSA Compliance<\/a><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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Clients are confusing quarterly updates with a mini tax return\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\tThis has been one of the more time-consuming misunderstandings. A quarterly update is a summary of income and expense totals, not a finalised, adjusted position. There is no need at this stage to account for accruals, prepayments, or stock adjustments. Those adjustments happen later, in the Final Declaration. Firms have had to actively manage client expectations here, since some assume every submission needs to be “correct” in the way a tax return traditionally does.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t
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The penalty question keeps coming up, and the answer offers some breathing room\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\tLate submission penalties under HMRC’s points-based system are suspended for the 2026\/27 tax year. That does not mean deadlines are optional. Firms are rightly still pushing clients to file on time and keep records current, since the suspension is temporary and habits formed now will matter once penalties do apply.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t
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Terminology confusion persists\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\tClients (and some junior staff) still refer to the old End of Period Statement, which has been replaced by the Final Declaration process. Getting this language right in client communications avoids unnecessary confusion later in the year.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t
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How Should Accounting Firms Prepare for the Next Quarterly Deadline?\n<\/h2>\t\t\t\t<\/div>\n\t\t\t\t
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With the first deadline of 7 August 2026 approaching, and further deadlines on 7 November 2026, 7 February 2027, and 7 May 2027, the practical priorities for firms are straightforward:<\/p>