Making Tax Digital for Income Tax, explained
Making Tax Digital (MTD) for Income Tax is a new way of reporting your income to HMRC. Instead of one Self Assessment return a year, sole traders and landlords will keep digital records and send HMRC a summary every quarter, then a final declaration after the tax year ends. It starts on 6 April 2026 for people with qualifying income over £50,000, and lower thresholds follow. This guide explains exactly who’s affected, when, and what you need to do.
Reviewed July 2026. Figures are correct at the date of review. Always check GOV.UK for the latest.
What Making Tax Digital for Income Tax is
MTD for Income Tax (sometimes called MTD for ITSA) is HMRC’s shift to digital, quarterly tax reporting for the self-employed and landlords. If it applies to you, three things change: you must keep your income and expense records digitally, use MTD-compatible software, and send HMRC a short update every three months instead of filing once a year. It replaces the annual Self Assessment return with quarterly updates plus a final year-end declaration.
Who it applies to, and when
Whether you’re in, and from when, depends on your qualifying income: your combined gross income from self-employment and property, before expenses. The rollout is phased:
| From | You’re in if your qualifying income is over | Based on your |
|---|---|---|
| 6 April 2026 | £50,000 | 2024 to 2025 tax return |
| 6 April 2027 | £30,000 | 2025 to 2026 tax return |
| 6 April 2028 | £20,000 | 2026 to 2027 tax return |
HMRC looks at the qualifying income on your most recent Self Assessment return to decide when you join. You don’t need to start until after you’ve submitted the relevant return.
What “qualifying income” means
Qualifying income is your total gross income from self-employment and property combined, not your profit, and not after expenses. So if you earn £30,000 from a trade and £25,000 from a rental property, your qualifying income is £55,000, and you’d join from April 2026, even though neither source alone is over £50,000. Employment income, dividends and other income don’t count towards the threshold, but they’re still reported.
What you’ll actually have to do
Once you’re in MTD for Income Tax, you’ll:
- Keep digital records of your business and property income and expenses.
- Send quarterly updates to HMRC: a summary of income and expenses for each three-month period.
- Submit a final declaration after the tax year, confirming your figures and any other income (this replaces the Self Assessment return).
- Use MTD-compatible software to do all of the above; you can’t file quarterly updates through the old HMRC online form.
How it’s different from Self Assessment today
Today you file one return a year, any time between the tax year ending in April and the 31 January deadline. Under MTD, you’ll report four times a year plus a final declaration: five touchpoints instead of one. The upside, done right, is no year-end scramble and a much clearer, real-time picture of what you owe.
MTD-compatible software
You’ll need software that can keep digital records and file directly with HMRC. Options range from full accounting packages to simple bridging tools. The right choice depends on how you work. We set our clients up on software that suits their business and handle the filing for them, so “compatible software” is one less thing to worry about.
Deadlines and penalties
Quarterly updates follow set dates through the year, with the final declaration after the tax year ends. Late quarterly updates fall under HMRC’s points-based penalty system, and late payment carries interest and penalties. The rules are new and the exact dates and figures are best checked on GOV.UK. Or, more simply, let us track them for you.
How Xpert helps you get MTD-ready
We take MTD off your plate entirely. We check whether and when it applies to you, set you up on the right MTD-compatible software, keep your records digital and up to date, and prepare and file every quarterly update and your final declaration, on time, on a fixed monthly fee, with a dedicated accountant and our 3-hour email promise. No panic, no penalties, no jargon.
Not sure if MTD affects you? Take our 2-minute quiz or download our free MTD readiness checklist below, and we’ll help you get ready.
Get the free MTD readiness checklist
A one-page checklist to see exactly where you stand and what to do before Making Tax Digital starts. Enter your details and we’ll unlock it instantly.
MTD for Income Tax: frequently asked questions
Short, plain-English answers to the questions we hear most.
When does Making Tax Digital for Income Tax start?+
It starts on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. It extends to those over £30,000 from April 2027, and over £20,000 from April 2028.
Who has to use MTD for Income Tax?+
Self-employed people and landlords whose combined gross income from self-employment and property is over the threshold for the relevant year. Employees and those below the thresholds aren't affected yet.
What counts as qualifying income?+
Your total gross income from self-employment and property before expenses, added together. Employment income and dividends don't count towards the threshold.
Do I still file a Self Assessment return?+
The annual return is replaced by four quarterly updates plus a final declaration through MTD-compatible software. You'll still report other income (like dividends) in the final declaration.
What software do I need?+
MTD-compatible software that keeps digital records and files with HMRC. We set you up on the right one and handle the filing.
What if I'm below £50,000?+
You're not required to join in April 2026, but lower thresholds arrive in 2027 and 2028, so it's worth getting ready early. You can also join voluntarily.
What happens if I miss a quarterly update?+
Late updates fall under HMRC’s points-based penalty system, and late payment adds interest and penalties. We track your deadlines so you don’t get caught out.
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