For years, Self Assessment has been the bedrock of how self-employed workers, landlords and small business owners report their income. You gather your receipts, crunch the numbers and submit one big return to HMRC each year. Straightforward enough — until now.
The government’s push towards digitalisation means this annual ritual is being dismantled and replaced with something far more frequent and tech-driven: MTD ITSA.
Goodbye Annual Return, Hello Quarterly Check-Ins
Instead of one tax return each January, individuals with property or business income above the designated thresholds will have to file four updates a year, plus a final statement. The idea is simple on paper: fewer mistakes, fewer surprises and a tax system that reflects your finances in real time. In practice, though, this is a seismic shift in how taxpayers interact with HMRC.
Think of it as HMRC becoming less like a distant authority you hear from once a year, and more like a business partner tapping you on the shoulder every three months for an update.
Who Stands to Gain?
Landlords and self-employed workers who already use digital accounting tools could find the transition painless. Real-time reporting means no more year-end shocks, better visibility of tax liabilities and potentially fewer last-minute scrambles. For people who like to keep a close eye on cash flow, this system could actually make life easier.
But the real winners might be HMRC itself. Billions are lost each year due to avoidable errors in tax returns. By forcing taxpayers to submit information in smaller, more frequent chunks, the government is betting those mistakes will shrink.
The Other Side of the Coin
For many, though, this new regime feels less like modernisation and more like micromanagement. Quarterly deadlines could easily become a source of stress, especially for those who juggle multiple income streams or manage their books manually. And then there’s the cost: digital record-keeping software isn’t optional under the new rules, and while some providers are affordable, others will eat into profits that are already under pressure.
There’s also a cultural barrier. Not everyone is comfortable adopting new software, particularly older taxpayers or those in trades where paperwork has always been done with pen and paper. For them, the move risks being disruptive rather than liberating.
Preparing for the Shift
The worst move anyone can make is to wait until the deadline looms. Transitioning early brings several advantages:
- Trial runs without penalty – Get used to the software and process before it becomes mandatory.
- Cash flow forecasting – Quarterly submissions force discipline and provide clarity.
- Professional guidance – Accountants will play a key role in helping clients adapt; engaging them early means fewer surprises.
Landlords, in particular, should take note. With rental income often fluctuating across months, digital tracking will highlight patterns and expenses that previously blended into a single annual return. This could be useful for planning, but only if systems are put in place well in advance.
Conclusion
Making tax digital software for landlords will demand adjustment, but it could also be the nudge that pushes individuals towards more disciplined financial management. If embraced early, it might feel less like red tape and more like a tool to stay ahead.