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7 Mistakes You're Making with MTD for ITSA (and How to Fix Them Before August)

  • Jun 25
  • 5 min read

If you’re a self-employed professional or a landlord in the UK, you’ve probably heard the whispers (or the shouts) about Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). We’ve been talking about it for years, but as of April 2026, the game has officially changed.

By now, you should be well into your first quarter of the new system. But here’s the kicker: the first big deadline is looming on 7 August 2026. This is when your first-ever quarterly update is due to HMRC.

At Accountant Search, we’re seeing a lot of business owners feeling the heat. It’s a big shift from filing one tax return a year to essentially doing it four times (plus a final declaration). To help you navigate the summer without a panicked call to HMRC, we’ve rounded up the seven biggest mistakes people are making with MTD for ITSA: and exactly how to fix them before that August deadline hits.

1. Thinking "This Doesn't Apply to Me"

The most common mistake we see is people assuming they are flying under the radar. HMRC has set very specific thresholds, and they aren't just for "big" businesses.

If your combined income from self-employment and property is over £50,000, you are already in the MTD for ITSA net as of April 2026. (If you’re between £30,000 and £50,000, your turn is coming in April 2027).

The Fix: Don’t guess. Add up your total gross income (before expenses) from all your self-employed trades and rental properties. If that number was over £50k in the last tax year, you need to be registered and ready to file by August 7th. If you're unsure, checking out our MTD 2026 Survival Guide is a great place to start.

Landlords and business owners reviewing digital records

2. Using "Non-Compatible" Software

You might love your custom Excel spreadsheet that you’ve used since 2012. We get it: it’s familiar. But for MTD for ITSA, your records must be kept digitally, and they must be able to "talk" to HMRC’s systems via an API.

A standard spreadsheet on its own cannot do this. You either need HMRC-compatible cloud accounting software or "bridging software" that links your spreadsheet to HMRC.

The Fix: Check the official HMRC list of compatible software. Popular options like Xero, QuickBooks, and FreeAgent are all ready to go. If you’re still clinging to your spreadsheets, you need to set up a "digital link" immediately. Check out our guide on how to transition from Excel to cloud accounting for a step-by-step walkthrough.

3. Confusing the August Deadline with the January Deadline

For decades, the "Big One" was January 31st. Under MTD for ITSA, January 31st still matters for your final tax payment, but the reporting has shifted.

The deadline on 7 August 2026 is for your first quarterly update, covering the period from 6 April to 5 July. If you miss this, you’re starting the new system with a strike against your name.

The Fix: Mark your calendar right now.

  • 7 August: First Update (April–July)

  • 7 November: Second Update (July–October)

  • 7 February: Third Update (October–January)

  • 7 May: Fourth Update (January–April)

Treat these dates with the same respect you used to give to the January 31st deadline.

Close up of person using cloud accounting software

4. Poor Digital Record-Keeping Habits

MTD isn't just about how you send the data; it’s about how you keep it. You are now legally required to maintain digital records of every single transaction. If you’re still keeping a shoebox of paper receipts and trying to type them all in once a quarter, you’re going to find the August deadline a nightmare.

The Fix: Go paperless. Use an app to scan receipts the moment you get them. Most modern accounting software has an app that lets you snap a photo of a receipt, extracts the data automatically, and stores it digitally. This ensures your records are always up to date and you aren't scrambling in the first week of August. You can learn more about avoiding these pitfalls in our post on 7 mistakes you're making with tax returns for the self-employed.

Smartphone scanning a receipt into a digital app

5. Mixing Personal and Business Transactions

This is the "classic" mistake. Using your personal bank account for business expenses makes digital record-keeping twice as hard. When you connect your bank feed to your MTD software, you’ll have to manually sort through every grocery shop and Netflix subscription to find your business costs.

The Fix: If you haven’t already, open a dedicated business bank account. It doesn't have to be fancy, but it must be separate. This allows your accounting software to pull in a clean "feed" of data, making your quarterly updates a 10-minute job instead of a 10-hour one.

6. Using the Wrong Period Dates

HMRC’s "quarters" for MTD for ITSA are specific. The first quarter isn't "April, May, June." It is specifically 6 April to 5 July.

If you try to submit data for a standard calendar month (like 1 April to 30 June), the system might reject it, or worse, you’ll end up with gaps or overlaps in your reporting that cause a massive headache at the end of the year.

The Fix: Ensure your software is set to the "Tax Year" periods rather than "Calendar Year" periods. Most MTD-compatible software will handle this automatically, but it’s always worth a quick check in your settings before you hit 'Submit' this August.

7. The "DIY" Danger (Trying to Do It All Alone)

The new MTD rules are complex. Between quarterly updates, "End of Period Statements" (EOPS), and the "Final Declaration," there is a lot more room for error. Making a mistake in your August filing could lead to HMRC opening an inquiry or issuing penalties later in the year.

The Fix: Don't be a hero. This is the year to finally get a professional on your side. An accountant doesn't just "do your taxes": they ensure your software is linked correctly, your expenses are categorized properly, and you’re claiming every relief you’re entitled to.

Small business owner meeting with an accountant in a modern office

How Accountant Search Can Help

The 7 August deadline is closer than it looks. If you’re feeling overwhelmed by software choices or the new quarterly requirements, we can help.

At Accountant Search, we specialize in matching SME owners and landlords with the perfect accountant for their specific needs. Whether you need a bookkeeping expert to handle the day-to-day or a tax preparation specialist to manage your MTD filings, we’ve got you covered.

Don't wait until August 6th.Find your perfect accountant match today and breathe easy knowing your MTD for ITSA is in safe hands.

Author: JessicaJessica is a senior contributor at Accountant Search, specializing in helping UK small businesses navigate the ever-changing landscape of HMRC compliance and digital transformation.

 
 
 

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