Most of my clients have never heard of Making Tax Digital for Income Tax. A few have, but only because HMRC sent them a letter and they weren’t sure what to do with it.
If that sounds familiar, this is for you.
HMRC is changing how self-employed people report their income. Instead of filing one tax return a year, you will soon be required to send updates to HMRC every three months. It is already happening for some creators. By 2028 it will apply to most.
I want to walk you through what it actually means in plain English, so you are not caught off guard.
So what is Making Tax Digital for Income Tax?
At the moment, if you are self-employed, you file a self-assessment tax return once a year. You have until 31 January to submit it for the previous tax year, and that is when you pay what you owe.
Making Tax Digital for Income Tax, which HMRC shortens to MTD ITSA, replaces that with a quarterly reporting system. You will keep digital records throughout the year and send HMRC a summary of your income and expenses four times a year. Then at the end of the year you send a final confirmation to close everything off.
Think of it as checking in with HMRC regularly rather than doing a big catch-up once a year.
The payment deadlines do not change. You still pay your tax bill in January and July. What changes is how and how often you report.
Does it apply to you, and when?
It depends on how much you earn. HMRC is rolling this out in stages.
If your total self-employment income was over £50,000 in the 2024 to 2025 tax year, it is already mandatory for you from April 2026. If you have not sorted this yet, it is urgent.
If your income was over £30,000 in the 2025 to 2026 tax year, you need to be ready by April 2027.
If your income was over £20,000 in the 2026 to 2027 tax year, April 2028 is your deadline.
HMRC should write to you if they believe you are in scope, but do not rely on that. It is still your responsibility to check, and the penalties for missing the deadline are real.
What income counts towards the threshold?
This is where a lot of creators get a nasty surprise, because HMRC looks at your gross income, not your profit.
Your expenses do not reduce this number. So if you earned £55,000 from brand deals, YouTube, affiliates, and merchandise before paying for anything, you are over the £50,000 threshold. Even if you spent £25,000 running your business and only kept £30,000. HMRC counts what came in, not what was left.
Everything counts towards that figure: sponsored posts, platform ad revenue, affiliate commissions, digital products, merchandise, Patreon income, UGC work, appearance fees. All of it.
I have had clients who genuinely believed they were nowhere near the threshold because they were thinking of their profit rather than their total earnings. Worth checking yours carefully.
What software do you need?
You cannot use a spreadsheet on its own. You cannot use HMRC’s portal for quarterly submissions. You need to use software that HMRC has approved for MTD ITSA.
The three I recommend for creators are Xero, QuickBooks, and FreeAgent. All three connect to your bank account automatically, categorise your transactions, and can submit directly to HMRC. If you are already on one of them, you are in a good position. If you are still using a spreadsheet or nothing at all, getting set up on proper software is the first thing to do.
HMRC keeps an updated list of approved software on GOV.UK if you want to look at all your options.
That said, not every creator needs to move to a full accounting platform. One of my clients had been tracking everything in Excel for years and had no intention of changing. We helped him register for MTD ITSA and set him up with bridging software instead. It takes his existing spreadsheet and submits the data directly to HMRC each quarter, at a fraction of the cost of a monthly Xero or QuickBooks subscription. He gets to keep doing his bookkeeping exactly the way he always has, and he is fully compliant. If you are attached to your spreadsheet, bridging software is worth knowing about.
Does the annual tax return go away completely?
Not entirely. You will still send a final declaration at the end of each tax year to confirm everything is accurate and complete. But if you have been submitting quarterly throughout the year, that final step becomes much simpler. Most of the work has already been done.
For most creators it will feel like less pressure at year end and more regular touchpoints through the year. That is not a bad thing if you have a system.
What happens if you miss a submission?
HMRC is bringing in a points-based penalty system for MTD ITSA, similar to the one already in place for VAT. Miss a quarterly deadline and you get a penalty point. Collect enough points and you get a financial penalty on top.
The exact figures are still being confirmed, but the direction is clear. With four submission deadlines a year instead of one, there are simply more chances to miss something. Getting into good habits early matters.
What if you run a limited company?
MTD ITSA only applies to sole traders and landlords for now. If all your income goes through a limited company, this does not affect you directly at this stage.
That said, quite a few creators run a company but still take on some work personally, such as UGC projects or speaking engagements. If any self-employment income sits outside your company structure, check whether that income pushes you into scope.
Why creators feel this more than most
Creator income is complicated in a way that most self-employed people’s income is not. You might have brand deals landing every few months, platform payouts arriving monthly, affiliate commissions trickling in from multiple networks, and the occasional gifted product that has a taxable value you need to track.
Under the annual self-assessment system, you could pull all of that together once a year. Under MTD ITSA, you need to categorise it and record it properly as you go, and report it every quarter.
That is not necessarily more work overall. But it does require a proper system. Creators who have been winging it with a spreadsheet or relying on bank statements at year end will find the shift hardest.
The upside, and I do think there is one, is that quarterly reporting gives you a much clearer picture of your tax position throughout the year. No more guessing in October whether you have put enough aside. No more January panic.
What should you do next?
If you are over £50,000, you need to act now. Sign up for MTD ITSA and get onto approved software if you have not already.
If you are between £30,000 and £50,000, you have until April 2027. Use that time well. Get your software sorted, build the habit of recording things properly, and do not leave it until the last minute.
If you are between £20,000 and £30,000, April 2028 is your deadline. You have time, but the earlier you build good habits the easier the transition will be.
If you are not sure whether you are in scope, add up everything you earned from self-employment last tax year before deducting any expenses. If that total is anywhere near £20,000, it is worth checking properly.
Do you need an accountant for this?
You do not have to use one. You can manage the quarterly submissions yourself through approved software if your records are clean.
But in practice, creator income is complex enough that most of my clients prefer to have someone handle it. Not because the submissions themselves are difficult, but because income from multiple platforms needs to be categorised correctly, overseas payments need treating the right way each quarter, and it is easy for small errors to compound over four submissions.
If you are already working with an accountant, now is a good time to ask them specifically how they plan to manage your MTD ITSA submissions.
Ready to get sorted?
At Capshine we work with UK content creators and influencers every day. We can check whether MTD ITSA applies to you, get you on the right software, and take care of your quarterly submissions so you can stay focused on your content.
Book a free 30-minute call and we will walk you through exactly where you stand.
Capshine is a UK accountancy practice specialising in digital creators and small businesses. This article is for general guidance only and does not constitute personal tax advice. Please seek professional advice for your specific circumstances.
