Skip to main content

Search

Welcome to our Support

Making Tax Digital for Income Tax (MTD for ITSA) – Who is in scope, what records you need, and how quarters work in BrightBooks

Shannon Brady
  • Updated

Who needs to use MTD for Income Tax and when, what digital records you must keep, and how to choose between Standard and Calendar quarters in BrightBooks.

 

1. Who needs to use MTD for Income Tax and when?

MTD for Income Tax applies to UK taxpayers who have self‑employment or property income above HMRC’s qualifying income thresholds.

Qualifying income is the combined gross income from self‑employment and property, before expenses and tax deductions are taken off.

HMRC’s current phasing is:

  • From 6 April 2026, you must use MTD if your qualifying income is over £50,000 in the 2024–25 tax year.
  • From 6 April 2027, you must use MTD if your qualifying income is over £30,000 in the 2025–26 tax year.
  • From 6 April 2028, legislation is planned so that individuals with a qualifying income over £20,000 (based on the 2026–27 tax year) also need to use MTD.
 

Partnerships are expected to join MTD for Income Tax in the future, but no start date has been announced yet.

 

You only need to follow the MTD for Income Tax rules for UK self‑employment and property income that counts towards these thresholds.

Important:

  • BrightBooks does not automatically enforce these thresholds for you.
  • It is your responsibility (or your agent’s) to check if and when you need to sign up, using HMRC’s tools and guidance.
 

2. What digital records do I need to keep?

Under MTD for Income Tax, you must keep certain records digitally, in software that can connect to HMRC and send your quarterly updates.

 

You need digital records for:

  • Income records – sales invoices, takings, fees, rental income
  • Expense records – purchase invoices, receipts, running costs, property expenses
  • Bank transactions – business bank account activity
  • Any other financial information used to calculate figures reported to HMRC
 

HMRC does not require you to scan and store all invoices/receipts, but each transaction must be recorded and stored in digital form (date, amount, category).

 

You can keep these digital records in:

  • BrightBooks
  • Other accounting software
  • Spreadsheets, as long as they are connected to HMRC via MTD‑compatible “bridging” software and linked digitally (for example, via imports, APIs, or linked cells)
 

BrightBooks is designed as MTD‑compatible bookkeeping software. It allows you to:

  • Record income and expenses digitally
  • Store details against each transaction
  • Keep separate records for each income source (self‑employment, UK property, foreign property)
  • Feed those records directly into your quarterly MTD update process
 

3. Choosing Standard vs Calendar quarters in BrightBooks

3.1 What is a Quarterly Period Type?

The Quarterly Period Type controls how your MTD quarters are dated and which transactions fall into each quarterly update.

 

HMRC allows two patterns of quarterly updates :

 

Standard update periods (aligned to the tax year)

  • 6 April – 5 July (deadline 7 August)
  • 6 July – 5 October (deadline 7 November)
  • 6 October – 5 January (deadline 7 February)
  • 6 January – 5 April (deadline 7 May)
 

Calendar update periods (month‑end aligned)

  • 1 April – 30 June (deadline 7 August)
  • 1 July – 30 September (deadline 7 November)
  • 1 October – 31 December (deadline 7 February)
  • 1 January – 31 March (deadline 7 May)
 

If your accounting period aligns exactly with the tax year (6 April to 5 April), Standard periods are usually appropriate.
If you have, for example, a 31 March year‑end, Calendar quarters can make record‑keeping and reconciliation simpler.

 

BrightBooks supports both Standard and Calendar quarters for each income source.

 

3.2 When do I have to choose?

You must choose a Quarterly Period Type before you submit your first quarterly update for that tax year for each income source (for example, each trade or property business) :

  • Once the first quarterly update is submitted for that tax year and income source, that Period Type is locked for the rest of that tax year.
  • You can only change Period Type from the start of the next tax year, and again, you must choose before submitting that year’s first quarterly update.
 

This keeps your obligations consistent within each tax year.

 

3.3 How this works in BrightBooks

  1. Go to Settings → MTD for ITSA → MTD Tax Setup.

  2. For each income source (self‑employment, UK property, foreign property), choose:

    • Standard update periods, or
    • Calendar update periods
     
  3. Click Save before filing your first quarterly update for that tax year.
 

System rules in BrightBooks:

  • If no Period Type is selected, BrightBooks will block the first quarterly submission and prompt you to choose one.

  • After a successful first quarterly submission for that tax year and income source:

    • The Period Type becomes read‑only for that year.
    • On‑screen help explains that any change will only apply from the next tax year.
     
  • In the MTD dashboard, BrightBooks shows:
    • The four quarterly periods for the selected type
    • Their statutory filing deadlines, so you can clearly see which quarter you are working on and when it is due.

 

For more background and resources on MTD for Income Tax, see Bright’s MTD hub by clicking here.