Making Tax Digital for Income Tax
Who is affected, key deadlines, compatible software and how to stay compliant with MTD for ITSA.
Mandatory from April 2026 for those earning over £50,000 from self-employment or property. Start preparing now.
What is Making Tax Digital?
Making Tax Digital (MTD) is HMRC's initiative to digitalise the UK tax system. It requires businesses and individuals to keep digital records and submit information to HMRC using compatible software. MTD for VAT is already mandatory for all VAT-registered businesses. The next major phase — MTD for Income Tax Self Assessment (MTD for ITSA) — will fundamentally change how sole traders and landlords report their income.
Who is Affected?
MTD for ITSA applies to self-employed individuals and landlords with total gross income above: • From April 2026: income over £50,000 • From April 2027: income over £30,000 • From April 2028 (planned): income over £20,000 This includes sole traders, freelancers, consultants, and property landlords. Those with income below these thresholds may still voluntarily sign up.
What You Must Do
To comply with MTD for ITSA you must: 1. Keep digital records of all income and expenses throughout the year 2. Use HMRC-recognised software to maintain those records 3. Submit four quarterly updates to HMRC summarising income and expenses 4. Submit a final year-end declaration confirming your total taxable income Quarterly updates are not full tax returns — they are brief summaries. The full calculation happens at year-end.
Compatible Software
HMRC maintains a list of approved software. Popular options include: • QuickBooks Online • Xero • FreeAgent • Sage Accounting • ANNA Business Tools • Coconut Spreadsheets can be used only if linked to HMRC via HMRC-approved bridging software. A standalone Excel spreadsheet is not compliant.
Quarterly Deadlines
The four reporting periods and submission deadlines: • Q1 (6 Apr – 5 Jul): deadline 7 August • Q2 (6 Jul – 5 Oct): deadline 7 November • Q3 (6 Oct – 5 Jan): deadline 7 February • Q4 (6 Jan – 5 Apr): deadline 7 May The final end-of-year declaration is due by 31 January — the same as the current Self Assessment deadline.
Penalties
HMRC uses a points-based system for late submissions: • Each missed quarterly update = 1 penalty point • Reaching 4 points triggers a £200 financial penalty • Points expire after a period of full compliance Late payment of tax continues to attract interest and surcharges under the existing rules.
Key Dates
April 2026
Mandatory for income over £50,000
April 2027
Extended to income over £30,000
April 2028
Planned: income over £20,000
Now
Voluntary sign-up open — start preparing
Need Help Getting MTD-Ready?
We can help you choose software, migrate records and set up quarterly submissions.
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