MTD ITSA for Agents - Frequently Asked Questions

Article ID: 3404

Last updated: 19 Mar, 2025

MTD for Income Tax - Frequently Asked Questions (for Agents)

Q1) What does MTD mean for my clients?

Clients that are mandated for MTD will be required to:

Maintain Digital Records (Bookkeeping Software/Spreadsheets) for each business at least quarterly
Submit income & expenses Updates to HMRC quarterly (or more frequently if they wish)
Finalise the tax year (equivalent to the current tax return) Submission of other income/allowances/reliefs etc.)

Q2) What are the mandated income types?

Qualifying Relevant income is defined as before any deductions for the following income types.

Turnover from self-employed trading activities
Gross rents and other income received from UK and Foreign property

Q3) Do agents have to have a client’s permission to sign them up to test the service before April 2026?

Yes, client permission must be obtained prior to signing them up for testing explaining what is required and what it means for them.

Q4) How do I sign up my clients to the public beta testing?

You must have an Agent Services Account in place.
You should check the eligibility criteria for the testing phase and see if your clients are suitable.
Speak to the potential clients, to explain the requirements and obtain permission
Ensure suitable software is in place for record keeping and submissions to the MTD service

Full instructions and the sign-up service can be found at https://www.gov.uk/guidance/sign-up-your-client-for-making-tax-digital-for-income-tax

Q5) Is the £50,000 and £30,000 threshold, profit or income(turnover)?

The threshold relates to mandated income types only, and it is the combined income/turnover rather than profit values from all mandated businesses. You would not include any other income such as employment, partnership or capital gains. Mandated Income types are as follows:

Turnover from all Self-Employment trades (current SA103) NOT partnerships.
Rents and other income from all property (UK SA105 & SA106 Foreign property section)

Q6) If a client has multiple businesses is it a combined quarterly submission, or is it a separate submission per business?

You would have to make separate submissions per business to meet the quarterly obligations, so HMRC will issue obligations per trade, for a UK property business (combine all UK property income) and for a Foreign Property Business (combine all foreign property income). So, if a client had two trades and a Uk property rental, they would have 3 submissions per quarter to make and separate digital records would be required for each business.

Q7) If a client has a trade with turnover of £60,000 and a property business with income of £15,000, will they have to submit updates for the property business as it is below the threshold?

Yes, the threshold is a combined income amount and once you are in MTD all mandated business types must be submitted quarterly.

Q8) Will HMRC auto-enrol taxpayers for 2025/26 and how will they decide who to mandate?

Yes, HMRC will auto-enrol taxpayers and will notify them in February 2026. To make the decision they will analyse the 2024/25 Tax Return’s and look at the income declared for the mandated income types on the SA103 Self-employment, SA105 UK Property and SA106 Foreign (Property Section only). If the combined income is above the threshold, they will be mandated. Please note, if the income from 2024/25 is not a full year, they will calculate an annualised turnover for the purpose of the test.

They will write to those they expect to be mandated this year using their 2023/24 Tax Returns to advise them they are likely to be mandated to give more notice.

Q9) If my clients income drops below the threshold, will they be able to stop submitting quarterly updates?

Clients will only be able to leave MTD for ITSA if their income falls below the threshold for 3 consecutive tax years; with the threshold reducing to 30K and then 20K this will be unusual as they would need to have 3 years income below the threshold at the point they want to leave. So likely three years under 30K or 20K once that is introduced.

Q10) What information must be contained within the digital records?

The digital records must support the values that need to reported to HMRC quarterly. This is income and expense information, there is no requirement to record balance sheet or personal expenditure. The details for each transaction should be:

Date
Amount
Category (Taxpayer can choose to categorise based on consolidated on detailed submission requirements) for detailed information of categories see the update notice https://www.gov.uk/government/publications/update-notice-for-making-tax-digital-for-income-tax/making-tax-digital-for-income-tax-update-notice

Q11) What do I do I a quarterly update was submitted with errors?

As the submissions are cumulative, you can simply submit the correct position in your next submission for the tax year. However, if you do wish to amend a previous submission or it was the last submission of the year (to 5th April) you can amend the last submission you made (as they are cumulative, you can only correct up to the last date you previously submitted)

Q12) Who is exempt from enrolling?

Individuals are automatically exempt and cannot sign up for Making Tax Digital if they are a: 

trustee, including a charitable trustee or a trustee of non-registered pension schemes 
person that does not have a National Insurance number — this only applies for a tax year where they do not have a National Insurance number on 31 January before the start of that tax year 
personal representative of someone who has died 
Lloyd’s member, in relation to their underwriting business

When taxpayers are automatically exempt, they will not need to apply for an exemption. Exemption for other practical reasons may be applied for once the application process has started – TBC by HMRC