HMRC updates MTD ITSA beta: Edition 3 (Jan 2026)

If you’re a sole trader, landlord, or you teach people who are learning how tax works, today’s update is for you. HMRC has published Edition 3 of its ‘Ready, Steady, File!’ newsletter (6 January 2026), rounding up progress in the 2025 testing programme for Making Tax Digital for Income Tax and what to do next. We’ve read it carefully and translated the essentials. (gov.uk)

A quick refresher so we’re all on the same page. From 6 April 2026, MTD for Income Tax applies to people with qualifying income above £50,000; from 6 April 2027 the threshold lowers to £30,000, with plans to legislate for £20,000 thereafter. ‘Qualifying income’ means your total gross income from self‑employment and property, not wages or dividends. HMRC will write to those in scope after checking Self Assessment returns, but it’s still your responsibility to check and be ready. (gov.uk)

Testing is now sizeable. HMRC reports around 5,000 taxpayers enrolled, with roughly 3,000 actively submitting quarterly updates and more than 3,000 second‑quarter submissions already in. About six in ten participants are represented by agents. Behind the scenes, multiple‑agent access has been proven and the system has moved to the Enterprise Tax Management Platform to support better pre‑population and near real‑time visibility. (gov.uk)

Quarterly updates are becoming a habit. If you’re on the standard tax‑year schedule, the third update (covering 6 October to 5 January) is due by 5 February 2026 while you’re in the voluntary test; from go‑live the standard deadline will be 7 February. If you’ve opted for calendar‑quarter updates, the October–December update is due by 7 February. HMRC says there are no penalties during testing, but punctual submissions help the service improve. (gov.uk)

Many errors come from calendar‑quarter choices. By default, updates follow the tax year, but you can choose to end on the last day of the month if your software allows. Make that choice before your first update and keep it for the year; the filing dates mirror the standard timetable: 7 August, 7 November, 7 February and 7 May. For 2026–27 there’s a small five‑day gap (1–5 April) to be reported separately via a Business Source Adjustable Summary. Check your accounting period first, then choose the update cycle that matches it. (gov.uk)

If you’re an agent, HMRC is asking you to sign up clients early for April 2026 where their 2024–25 qualifying income is above £50,000. Each client must be signed up individually, and once they’re on the list there’s nothing to send until the rules apply-though setting up software and digital record‑keeping now will save stress later. (gov.uk)

There’s a soft‑landing on penalties for the first year of mandation. For customers who must start on 6 April 2026, no penalty points will be applied for late quarterly updates during the first 12 months. You still need to send quarterly updates before you can file the end‑of‑year return, and the end‑of‑year return remains within the penalty regime. (gov.uk)

What this means for you: take January to choose compatible software, connect bank feeds if you use them, and practise creating a quarterly update so nothing is new on deadline day. If you work with an adviser, confirm who presses ‘submit’ each quarter and make sure the right client authorities sit in the agent services account-HMRC has step‑by‑step instructions for moving existing Self Assessment authorities across. (gov.uk)

For learners and first‑time filers, a quick Q&A in plain English. What counts towards ‘qualifying income’? Add up your gross self‑employment and property income; employment and dividends are not included. Do quarterly updates replace the tax return? No-you still finalise by 31 January through your software. Picking calendar‑quarters? Mark 7 August, 7 November, 7 February and 7 May in your diary now. (gov.uk)

HMRC also wants your feedback on the ‘year‑to‑date’ tax estimate you see after each quarterly update. Treat this as a budgeting guide rather than a final bill, and if you’re in the testing cohort, spend a few minutes on the survey so the calculation improves before April 2026. (gov.uk)