What are the Changes?

MTD ITSA is the second stage of Making Tax Digital and will replace the current system of annual Self-Assessment tax returns. MTD ITSA comes into effect in April 2024. The most significant change is that instead of sending a Self-Assessment tax return to HMRC once a year, businesses and individuals will submit four quarterly updates. At the end of each tax year, they will also have to send an end of period statement (EOPS) and final declaration.


This forms part of the Government strategy for Making Tax Digital with the aim of HMRC becoming one of the most digitally advanced tax administrations in the world. In the process, this will save businesses and individuals time, helping to eradicate errors for those managing their tax affairs.

Who does this affect? 

This is applicable to self-employed business owners and landlords, and in April 2025 for partnerships with individual partners. Other types of partnership will join at a future date.

How should I keep my records?

Businesses and individuals will need to keep digital accounting records. Digital records can be achieved by using compatible accounting software, such as Xero, QuickBooks, Sage, and many others. Where businesses decide not to use an accounting software, an alternative option is to use bridging software. Businesses can maintain spreadsheets which are used in conjunction with the bridging software. Digital links must be in place to ensure records are kept digitally as information is passed between the different platforms.

Bridging software can be a more cost effective and simpler option for businesses who are not yet able to move to an accounting software.

Where businesses currently use a desktop or cloud-based accounting software, you will need to ensure that the package is fully compliant with MTD. The best way to check this is to contact your accountant or the software provider directly.

Are there any exemptions?

As with MTD – VAT, there are likely to be some MTD exemptions if it is not reasonable or practicable for businesses to use digital tools for their tax. Businesses would have to apply for an MTD exemption via the GOV website. Businesses that have previously received exemptions from digital filing are likely to continue to have exemptions to MTD requirements.

What are the next steps?

You can sign up as an individual for MTD ITSA via the GOV website . If you’re working with a recognised provider (typically an accounting firm like Elsby), you can sign up now assuming the provider uses software that works with Making Tax Digital for Income Tax.

For those wishing to help test and develop MTD ITSA before 6 April 2024, you may be able to voluntarily sign up through your software provider.

Businesses who have failed to sign up in time or have failed to retain digital records or digital links may be charged penalties.

Our cloud accounting credentials

We don’t just understand digital and cloud accounting, we excel at it. We are a Xero Platinum Partner and were the first accountancy firm in the world to receive a Xero migration certification. Our 5-star ratings on Reviews.io and Google are a result of the strong relationships, satisfaction and trust we have built with our clients.

We can support you with the following:

  • Transitioning to accounting software, including advising on the best options and providing software training
  • Providing bridging software
  • Registering for MTD
  • Reviewing current processes and VAT returns for confidence of compatibility
  • Advice/support on claiming MTD exemptions

What our clients say about us

Gina Wood
Dipesh Radia has always been most professional and friendly in his emails and telephone conversations. He is very knowledgeable in all areas of tax affairs. Overall the service received has been of a very satisfactory level. Communication is excellent which is key to maintaining a good relationship with clients
Mark Ellis
Elsby & Co look after all my Tax and accounting needs, both personal and Business, and I am completely happy with the service they provide. In all of my dealings, whether by phone or e mail, I have always found all staff to be extremely pleasant....Polite, capable ,professional and easy to talk to. If I have had any questions or queries, they have always answered them straight away, fully and to my complete satisfaction. Responses to my mails or calls has been virtually immediate. I have every faith in them to always look after my best interests and therefore I would happily recommend Dipesh and the whole Elsby and Co team to my family and friends.
Zane Oliver
I had the pleasure of working with James from Elsby & Co as my accountant, and I cannot recommend him enough. James is an expert in his field, and he provided me with fantastic accounting services that went above and beyond my expectations. James took the time to understand my business and my financial needs, and he provided me with tailored advice and solutions that helped me to improve my bottom line. He is knowledgeable, efficient, and detail-oriented, ensuring that all of my financial records were accurate and up-to-date. In addition to his technical abilities, James is also a pleasure to work with. He is friendly, approachable, and always available to answer any questions I had. He made the often-daunting process of managing my finances a breeze, and I always felt confident that my financial affairs were in good hands. Overall, I cannot recommend James and Elsby & Co enough. If you are looking for an accountant who can provide you with top-notch services and help you to achieve your financial goals, look no further. James is the best in the business, and I guarantee that you will not be disappointed!
Colin Halford
Formerly Trevor Newell Accountants, i was a little apprehensive when i learnt a new accountants would be doing my accounts. Dipesh is now my accountant & after a little misunderstanding on my part probably i am happy with how things work & that he is doing a good job on my behalf & explains things well.
Emma Fletcher
Elsby & Co recently performed an external audit for us for a grant fund claim. The process was simple and efficient and the team were very helpful.
Ben Verinder
Professional. Prompt to respond to queries. Good team and really really useful advice.
Very professional, knowledgable and friendly team, everyone goes above and beyond ! I couldn’t recommend Elsby & Co highly enough !!!
Sam Etemadi
The level of advise, care and professionalism is next to none. Our company, Dr S Etemadi Dental Practice Ltd, has been a client for many years and intends to stay for many more years to come. Highly recommended.
Sam Etemadi
A very big Thank You to Leona, James, Natalie, Sarah, Sarah, Charlotte, Rebecca and everyone else in this firm who are always there to lend a hand when you need advice and help. One of the best!
Nic Brough
Personal tax has become complex for me, and Elsby were able to review my position and do a professional job of filing the return for me, incidentally helping me save some money as well as giving me two days back. Very helpful and friendly, as well as clear and fast.

We focus on giving you the right advice to help your company grow