Making Tax Digital (MTD) is one of the most significant changes to the UK tax system in a generation. From April 2026, many self-employed individuals and landlords will need to change the way they keep records and report income to HMRC.

If you’re running a small business or letting out property, here’s everything you need to know about Making Tax Digital for Income Tax.

What is Making Tax Digital for Income Tax?

MTD for Income Tax is HMRC’s new system requiring businesses and landlords to:

Keep digital records of income and expenses.
Use compatible software (such as accounting apps or spreadsheets with bridging software).
Send quarterly updates of income and expenses to HMRC.
Submit a final declaration at year-end including any other sources of income like bank interest or pensions.

The aim is to reduce errors, improve accuracy, and give taxpayers a clearer, more up-to-date view of their tax position.

Who Needs to Join MTD for Income Tax?

MTD may apply to individuals with:

Self-employment income (sole traders)
Property rental income (UK or overseas).

The key test is gross qualifying income. That’s your total turnover from your self-employment and rental property, put together, on your latest tax return before expenses.

Thresholds and Timeline

The rollout is being phased in over three years:

From April 2026 — if your qualifying income is over £50,000 in the 2024-25 tax year.
From April 2027 — if your qualifying income is over £30,000 in the 2025-26 tax year.
From April 2028 — if your qualifying income is over £20,000 in the 2026-27 tax year.

Note: If your income falls below the threshold in later years, you generally stay in MTD unless you meet specific exit conditions.

When You’ll Send Your Quarterly Updates

Who Is Exempt?

You won’t need to join MTD if:

Your income is below the thresholds at the relevant start date.
You are in partnership (mandation for partnerships is still under consultation).
You can claim digital exclusion (for example, due to religion, age, disability, lack of internet access).
You file on certain other bases (e.g. some non-UK residents, remittance basis users).

What Will Change in Practice?

If you’re currently filing a Self-Assessment return once a year, here’s what will be different under MTD:

Quarterly submissions: You’ll send updates to HMRC every three months via software.
End-of-period statement: This replaces your current tax return and ties everything together.
Digital records required: Paper records won’t be accepted.

So instead of a single annual tax return, you’ll be making five digital submissions per year (four quarterlies plus the final declaration).

How to Prepare Now

Even if you don’t fall into MTD until 2027 or 2028, it pays to get ahead. Here’s what you can do now:

Check your income — Work out your gross qualifying income (before expenses).
Choose software — Move your bookkeeping to a digital system such as Xero, QuickBooks, FreeAgent, or similar.
Get organised — Keep digital copies of invoices and receipts.
Talk to your accountant — MTD will change how and when you share information, so make sure you’re ready.

Frequently Asked Questions

1. What if I have both self-employment and rental income?

You must add the total turnover together. If the total exceeds the threshold, you fall into MTD.

2. Does VAT registration affect this?

No, VAT and Income Tax are separate. If you’re already in MTD for VAT, you may still need to comply with MTD for Income Tax.

3. Will I need to pay tax quarterly?

No — you’ll submit income data quarterly, but your payment dates remain the same (31 January and 31 July, if applicable).

4. Can I still use spreadsheets?

Yes, but only if you use HMRC-approved bridging software to submit updates digitally.

5. What if my income drops below £30,000 after joining?

Once you’re in, you normally stay in unless you qualify to exit under HMRC rules.

6. Does this apply to partnerships or companies?

Not yet. Partnerships are due to join later (date TBC). Companies are outside the scope — MTD Corporation Tax is a separate future project.

The Bottom Line

Making Tax Digital represents a fundamental shift in how self-employed individuals and landlords interact with HMRC. While the change may seem daunting, it’s designed to give you better control over your finances and a clearer picture of your tax obligations throughout the year.

The phased approach means you have time to prepare, but procrastination could leave you scrambling when your deadline arrives. Starting the transition now — even if you’re not required to join until 2027 or 2028 — will make the process smoother and less stressful.

Remember: this isn’t just about compliance. Digital record-keeping can actually improve your business by giving you real-time insights into your income and expenses, helping you make better financial decisions year-round.

Need Help Navigating MTD?

As an ACA CTA qualified accountant, I specialise in helping landlords and self-employed professionals prepare for Making Tax Digital for Income Tax. Whether you need software recommendations, help setting up your digital records, or ongoing support with quarterly submissions, I’m here to make the transition as smooth as possible.

Don’t wait until the deadline is looming. Get ahead of MTD today.