Blog, MTD for ITSA

What’s the difference between MTD VAT and MTD ITSA?

MTD (Making Tax Digital) isn’t one rule – it’s two separate regimes aimed at different taxes. MTD for VAT already applies to all VAT-registered businesses, and it requires digital VAT records and VAT Returns filed through compatible software.

MTD for Income Tax Self Assessment (MTD for ITSA) is a separate requirement for sole traders and landlords to keep digital records and send quarterly updates before finalising their year-end position in software. If you’re a sole trader or landlord who’s also VAT-registered, you’ll need software that can handle both obligations so your VAT and income-tax workflows stay compliant in one place.

Download EasyBooks if you’re VAT-registered and also coming into scope for MTD for ITSA – it handles your MTD VAT obligations today and pairs smoothly with your ITSA setup, so you stay compliant across both taxes without changing tools twice.

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MTD VAT vs ITSA

MTD for VAT – HMRC’s rules are simple: if you’re VAT-registered, you must keep VAT records digitally and submit VAT Returns using compatible software (or bridging software linked to spreadsheets). HMRC also notes that all VAT-registered businesses should now be signed up (new registrations are enrolled automatically unless exempt).

MTD for ITSA – This is about income tax for sole traders and landlords. You must keep digital records and send quarterly updates from software, then finalise and submit your year-end figures through software. Mandation is phased by qualifying income (your total self-employment plus property income before expenses).

Difference between MTD VAT and income tax

1. Who must follow?

VAT: All VAT-registered businesses, regardless of turnover (unless HMRC grants an exemption).

Income tax (ITSA): Sole traders and landlords with qualifying income over £50,000 from 6 April 2026, and over £30,000 from 6 April 2027. The government has also set out plans (subject to legislation) to extend to £20,000+ from 6 April 2028, assessed on 2026–27 income. Voluntary sign-up is available before you’re mandated.

2. What you submit?

VAT: Periodic VAT Returns from digital VAT records, via compatible software (or bridging software).

ITSA: Quarterly updates (fixed deadlines: 7 August, 7 November, 7 February, 7 May) and a year-end submission through software; payment date remains 31 January.

MTD ITSA explained

Under ITSA, you keep digital records for each business/property source and send quarterly updates from software. HMRC sets the update periods and deadlines (standard periods align to the tax year; the deadline dates are fixed). After the tax year ends, you make any adjustments and submit your final figures via software – the 31 January payment deadline does not change. HMRC also allows voluntary sign-up so you can practise before your mandatory start date.

VAT MTD vs income tax MTD: software choices

Because MTD VAT applies to all VAT-registered businesses, you must use VAT-compatible software to keep digital VAT records and submit VAT Returns. MTD ITSA requires compatible software for your quarterly updates and year-end from your mandated date (or sooner if you volunteer). HMRC provides two official software finders – one for VAT and one for ITSA – so you can check compatibility for each regime.

Tooling note (VAT + ITSA together): If you’re a sole trader or landlord who is also VAT-registered, choose a setup that covers both obligations.

MTD VAT vs ITSA: quick recap for busy owners

• VAT → everyone registered for VAT: digital VAT records + VAT Returns via compatible software.

• ITSA → sole traders and landlords: digital records + quarterly updates + year-end via software; phased mandation (£50k from April 2026; £30k from April 2027; planned £20k from April 2028).

• If you’re both VAT-registered and in scope for ITSA, choose software (or a pair of apps) that covers both – and confirm each one on HMRC’s software finders for your situation.