From April 2026, sole traders and landlords earning above £50,000 must submit quarterly digital tax updates to HMRC under Making Tax Digital for Income Tax Self Assessment. Bank statements sit at the centre of this change — you can no longer rely on paper records or manually typed figures. Every transaction needs to flow from a digital source into compliant software, which means the format of your clients' bank statements matters more than it ever has before.
Why MTD for ITSA Changes How You Handle Bank Statements
MTD for ITSA is not simply a new way to file the same return. It replaces the annual Self Assessment process with quarterly updates submitted through HMRC-recognised software. HMRC's guidance on MTD for ITSA makes clear that businesses must keep digital records of all income and expenses, and that these records must be maintained using compatible software from the very first transaction of each tax period.
Bank statements are your primary source document for most of these records. If a client hands you a paper statement, or a PDF that cannot be read by accounting software, you have a problem. The data needs to move digitally from the bank into your records without manual re-keying at any point — HMRC refers to this requirement as maintaining a digital link.
A digital link means the data travels electronically from one system to another. Copying a figure by hand and typing it into a spreadsheet breaks that link. Exporting a CSV from your bank and importing it directly into Xero, QuickBooks, or Sage does not.
What Format Does HMRC Require for Digital Records?
HMRC does not prescribe a specific file format like CSV or OFX. What matters is that the data is machine-readable and transferred digitally from source to software without manual transcription.
In practice, this means:
- CSV (Comma-Separated Values) files exported from online banking are the most widely supported format across UK accounting software
- OFX and QFX files work well with QuickBooks and some Sage products
- PDF bank statements do not qualify on their own — PDFs are images or text documents, not structured data, and cannot be imported directly into accounting software
- Open Banking feeds where your software connects directly to the bank provide a clean, automatic digital link and are the most future-proof option
The issue most accountants face right now is that many clients only have PDF statements. Barclays, HSBC, NatWest, Lloyds, and Santander all generate PDF statements by default when a customer downloads from online banking. Those PDFs need converting to CSV before they can be used in compliant software.
You can convert those PDFs using a dedicated tool like the bank statement converter at convertbank-statement.com, which handles statements from all major UK banks and outputs clean, import-ready CSV files.
Which Clients Are Affected and When?
HMRC is rolling out MTD for ITSA in phases based on income thresholds:
| Phase | Start Date | Who Is Affected |
|---|---|---|
| Phase 1 | April 2026 | Sole traders and landlords with gross income above £50,000 |
| Phase 2 | April 2027 | Sole traders and landlords with gross income above £30,000 |
| Phase 3 | April 2028 | Sole traders and landlords with gross income above £20,000 |
| Partnerships | TBC | General partnerships — date not yet confirmed by HMRC |
Limited companies are not included in MTD for ITSA. They are subject to a separate MTD for Corporation Tax programme, which HMRC has not yet given a firm implementation date for.
The £50,000 threshold applies to gross income — that is, total receipts before expenses. A landlord receiving £52,000 in rental income is in scope from April 2026 even if their taxable profit is much lower.
HMRC's official MTD for ITSA page confirms these thresholds and is worth bookmarking for updates: https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax
How Do You Prepare Clients' Bank Statements for MTD?
The practical workflow for most accountants will involve three stages: getting the data out of the bank, converting it into a usable format, and importing it into compliant software.
Step 1: Audit your client bank statement formats
Before April 2026, go through your client list and identify who is in scope. For each in-scope client, check what format their bank statements are available in. Log in to their online banking (or ask them to) and check whether CSV or OFX export is available directly.
Most major UK banks now offer CSV exports from their online banking portals, but the location varies:
- Barclays: Export via the transaction history page, choose CSV
- HSBC: Available under 'Statement download' in the accounts section
- NatWest / RBS: Export from the 'Statements' tab, select date range then download
- Lloyds Bank: Download statement as CSV from the transaction list
- Santander: Available as CSV under 'Manage account'
If a client only has access to PDF statements — for example, older statements from a closed account, or a business account that doesn't support CSV export — you will need a conversion step.
Step 2: Convert PDF statements to CSV
A PDF-to-CSV converter reads the layout of a bank statement PDF and extracts the date, description, debit, credit, and balance columns into a structured spreadsheet. The quality of the output depends heavily on how well the tool understands each bank's specific layout.
Barclays business statements use a different column structure to Barclays personal statements. HSBC Premier statements include sub-headings that a poor converter will misread as transactions. A purpose-built UK bank statement converter handles these differences properly.
The convertbank-statement.com converter is built specifically for UK bank formats and produces output that imports cleanly into Xero, QuickBooks, Sage, and FreeAgent. You can see a full breakdown of supported banks and pricing at the pricing page.
Step 3: Import into MTD-compliant software
HMRC maintains a list of software recognised for MTD for ITSA. At the time of writing, this includes Xero, QuickBooks Online, Sage Accounting, FreeAgent, and a number of specialist products. You can check the full list on HMRC's software choices page.
Once your CSV is clean and correctly formatted, import it using the bank import or transaction upload function within the software. Most platforms accept a standard 4-column format: date, description, debit amount, credit amount. Some also accept a running balance column, which helps with reconciliation.
What Are the Penalties for Non-Compliance?
HMRC is introducing a points-based penalty system for MTD for ITSA. Each missed quarterly submission earns one point. Once a threshold is reached — four points for quarterly filers — a £200 penalty applies. Further missed submissions after that trigger additional £200 charges each time.
Separate late payment penalties also apply. Interest accrues on unpaid tax from the due date, currently at the Bank of England base rate plus 2.5 percentage points.
These penalties are in addition to, not instead of, existing Self Assessment penalties. The ICAEW has published useful guidance on how the two penalty regimes interact, which is worth reading if you have clients who are already poor filers: https://www.icaew.com/technical/tax/making-tax-digital
For accountants supporting clients through the transition, AccountingWeb has been tracking MTD developments closely and is a reliable source for practical updates: https://www.accountingweb.co.uk/tax/personal-tax/making-tax-digital
A Practical Checklist for Accountants Before April 2026
- Identify all clients with gross income above £50,000 who are sole traders or landlords
- Confirm each client is enrolled in HMRC's MTD for ITSA pilot or is registered to go live in April 2026
- Check what bank statement formats each client can access
- Set up CSV export or Open Banking feeds where possible
- Establish a conversion workflow for clients who only have PDFs
- Confirm your practice management software is on HMRC's approved list
- Test a full quarterly update submission before the first live deadline
Getting the bank statement workflow right before the first quarter ends will save a significant amount of catch-up work later. The first quarterly update for a client with a 6 April 2026 start date will be due by 5 August 2026.
If you want a broader comparison of bank statement conversion tools before committing to a workflow, the best bank statement converter guide for 2026 covers the main options available to UK accountants.
About the author: James Cooper is a chartered accountant with over 10 years of experience helping UK businesses manage their financial records and prepare for digital tax compliance.
Frequently Asked Questions
Does MTD for ITSA require bank statements to be in a specific format? HMRC does not require a specific file format, but records must be kept digitally and transferred between systems using a digital link — no manual re-keying. CSV exports from online banking or Open Banking feeds both satisfy this requirement. PDF statements alone do not.
Can I use a PDF bank statement for MTD for ITSA? Not directly. A PDF is not machine-readable in the way HMRC requires. You need to convert the PDF to a structured format like CSV before importing it into your MTD-compatible software. Purpose-built converters like the one at convertbank-statement.com handle this for all major UK banks.
When does MTD for ITSA start for sole traders earning £50,000? MTD for ITSA becomes mandatory for sole traders and landlords with gross income above £50,000 from 6 April 2026. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028.
What happens if a client misses a quarterly MTD update? HMRC's points-based penalty system awards one penalty point per missed submission. Quarterly filers accumulate a £200 financial penalty once they reach four points. Further missed submissions after that trigger additional £200 penalties each time.
Which accounting software is approved for MTD for ITSA? HMRC's recognised software list includes Xero, QuickBooks Online, Sage Accounting, and FreeAgent, among others. The full and current list is maintained on the HMRC website and is updated as new products gain recognition.
Do limited companies need to comply with MTD for ITSA? No. MTD for ITSA applies only to sole traders and landlords. Limited companies are subject to a separate MTD for Corporation Tax programme, which does not yet have a confirmed start date.
Last reviewed: 2026-03-15
