Making Tax Digital (MTD) for Income Tax is being phased in from 6 April 2026 and will significantly change how self-employed individuals and landlords report their income to HMRC.
HMRC has begun writing to taxpayers who will be required to comply, but receiving a letter is not a prerequisite. The responsibility to check whether you are within scope-and to sign up-rests with the taxpayer.
Below is a practical overview of what MTD for Income Tax means, who is affected, and what actions you should take.
Who Must Comply with MTD for Income Tax?
You will be mandated into MTD for Income Tax from April 2026 if:
- your total gross income (not profit) from self-employment and/or property exceeded £50,000 in the 2024/25 tax year; and
- no exemption applies.
The income test is based on figures reported on your 2024/25 Self Assessment tax return, using specific turnover boxes for self-employment and property income.
Future phases
MTD for Income Tax will be extended as follows:
- from April 2026 – gross income over £50,000
- from April 2027 – gross income over £30,000
- from April 2028 – gross income over £20,000
Currently, partnerships are excluded, although they are expected to be brought into MTD at a later date.
HMRC Letters
HMRC is issuing letters to taxpayers it believes are within scope:
- letters are being sent in phases depending on when the 2024/25 tax return was submitted
- each mailing can take up to two weeks
- some taxpayers may not receive a letter until late March or early April
- agents will not receive copies
Not receiving a letter does not mean you are not required to comply.
Your Responsibilities as a Taxpayer
Even though HMRC is issuing mandation letters, it is the taxpayer’s responsibility to:
- check whether they are required to comply with MTD for Income Tax from April 2026; and
- sign up for MTD if they are within scope.
If you believe you should comply but have not received a letter, you should still register.
What Changes Under MTD for Income Tax?
MTD does not change the underlying tax rules or payment deadlines. However, it does change how records are kept and how information is submitted.
If you are within scope, you will need to:
- keep digital accounting records (paper records alone will no longer be sufficient);
- use MTD-compatible software;
- submit quarterly updates to HMRC; and
- submit a year-end final declaration instead of a traditional Self Assessment return.
Quarterly Updates Explained
You will be required to submit summaries of income and expenses every quarter using approved software.
Standard quarters
- 1 April to 30 June – due 7 August
- 1 July to 30 September – due 7 November
- 1 October to 31 December – due 7 February
- 1 January to 31 March – due 7 May
Calendar quarters (optional)
Taxpayers may elect to report using calendar quarters, which end on the last day of each month, to better align digital record-keeping with bank statements and month-end accounting cycles:
- 1 April to 30 June – due 7 August
- 1 July to 30 September – due 7 November
- 1 October to 31 December – due 7 February
- 1 January to 31 March – due 7 May
Quarterly updates are simple summaries, not full tax returns. They are cumulative year-to-date figures and no tax adjustments or declarations are required at this stage.
Penalty easement
Taxpayers joining in April 2026 will not receive penalties for late submission of their first four quarterly updates. This soft landing does not apply to the year-end return.
Year-End Final Declaration
After the fourth quarterly update:
- accounting and tax adjustments are made through the software;
- all income sources are brought together; and
- a final declaration is submitted, similar to the current Self Assessment return.
The 2026/27 final declaration will be due by 31 January 2028. Late filing penalties will apply if this deadline is missed.
Digital Record-Keeping Requirements
You must record each transaction digitally, including:
- the amount;
- the date; and
- the category, such as income or expenses.
Invoices and receipts do not need to be scanned, but the transaction details must be stored digitally.
Spreadsheets are permitted only if linked to MTD-compatible software using digital links.
Exemptions from MTD for Income Tax
You may be exempt if you are:
- digitally excluded due to age, disability, location or religious reasons;
- a trustee, partnership, or non-resident company;
- a foster carer, for qualifying care income only; or
- subject to Power of Attorney or deputyship.
Some exemptions apply automatically, while others must be applied for.
Free Software and Support
The government has confirmed that free MTD software will be available for taxpayers with straightforward affairs, although full details are still being finalised.
Many taxpayers will choose to appoint an accountant or tax adviser to manage MTD compliance on their behalf.
How We Can Help
Unsure whether Making Tax Digital for Income Tax applies to you, or what you need to do next?
As experienced tax specialists we can review your income sources, confirm whether you are within scope, and guide you through every step of the process.
We can help you:
- assess whether you are required to comply with MTD from April 2026;
- register for MTD with HMRC;
- choose and set up suitable MTD-compatible software;
- maintain compliant digital records;
- prepare and submit quarterly updates and year-end declarations; and
- stay compliant with HMRC requirements and avoid penalties.
Contact us today for a free consultation – we will help you navigate Making Tax Digital with clarity and confidence, so you can focus on running your business.