Making Tax Digital for Income Tax, explained

This is general information, not advice for your specific situation — and the rules can change. Always check GOV.UK or get in touch for your own position. [CONFIRM all figures & dates against GOV.UK before publishing]

What is MTD for Income Tax?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC's new way of reporting self-employment and property income. Instead of one Self Assessment tax return a year, affected taxpayers must keep digital records and send HMRC a summary every quarter, then a final declaration after the tax year ends.

The goal, according to HMRC, is to reduce errors and give people a clearer running picture of what they owe. In practice it means more frequent reporting — which is manageable with the right software and someone keeping an eye on the deadlines.

Who has to comply — and when

MTD ITSA is being phased in by income level:

• From April 2026 — sole traders and landlords with qualifying income over £50,000
• From April 2027 — those with qualifying income over £30,000
• From April 2028 — those with qualifying income over £20,000 (announced)

It applies to individuals reporting self-employment and/or property income. It does not apply to limited companies — companies pay Corporation Tax, and MTD for Corporation Tax is a separate scheme that isn't live yet.

What counts towards the threshold

This catches a lot of people out: the threshold is based on your gross income (turnover) from self-employment and property combined — before you deduct any expenses. It's not your profit.

What you'll actually have to do

1. Keep digital records of business and property income and expenses using HMRC-recognised software.
2. Send quarterly updates — a running summary of income and expenses, four times a year.
3. Submit a final declaration after the tax year, confirming the figures and any other income (this replaces the old Self Assessment return).
4. Pay your tax by the usual deadlines — the payment dates aren't changing.

If you have both self-employment and property income, you'll generally report them as separate streams.

Who's exempt or excluded

• People with qualifying income below the current threshold (you stay on standard Self Assessment for now).
• Those who are digitally excluded — for example due to age, disability, location or religious grounds — can apply for an exemption.
• Certain other groups have deferred start dates. [CONFIRM current exemption list on GOV.UK]

How to get ready (the easy way)

You don't have to figure this out alone. As part of my fixed monthly plans I:

• Check whether — and when — MTD applies to you
• Set up HMRC-recognised software and link it to your bank
• Get the right HMRC authorisations in place
• Prepare and file your quarterly updates
• Track all the deadlines so you never face a late-filing penalty

Your year-end final declaration / Self Assessment tax return is a separate fixed-price service, so you only pay for it when it's due. VAT returns and CIS are also available as add-ons.