Key takeaways
MTD started from April 2026
Higher-income landlords and sole traders are affected.
Quarterly digital reporting required
Tax records and updates must be submitted electronically.
Early preparation will reduce risk
Review software, exemptions and compliance obligations now.
As you may be aware, there has been talk about ‘making tax digital’ for Income Tax for a few years. MTD has come in to force for certain individuals from 6 April 2026.
This short guidance note is aimed at providing awareness on how you may be impacted by the MTD rules and what you must do to maintain compliance.
Who will need to use MTD for income tax?
You will need to use MTD for Income Tax if all the following apply:
you are a sole trader or a landlord registered for self-assessment
you receive income from self-employment or property, or both
your qualifying income is more than £20,000.
Qualifying income is the total income an individual gets in a tax year from self-employment and property. Your total income may come from more than one source of self-employment or property income. All other sources of income reported through Self-Assessment do not count towards your qualifying income (this includes PAYE, partnership / dividends, private pensions and State Pension)
Qualifying income is calculated with reference to the previous filed tax return.
The date in which you need to start using MTD for Income Tax depends on your qualifying income within a tax year. If your qualifying income is over:
£50,000 for the 2024 to 2025 tax year, you will need to use it from 6 April 2026
£30,000 for the 2025 to 2026 tax year, you will need to use it from 6 April 2027
£20,000 for the 2026 to 2027 tax year.
You would not need to start using MTD for Income Tax until after you have submitted your first Self-Assessment tax return, but you can choose to sign up early.
In some instances, an individual may be exempt from Making Tax Digital for Income Tax
Common exemptions are:
Your qualifying income is £20,000 or less.
You are digitally excluded.
Age, health condition or disability prevents an individual from using a computer, tablet or smartphone to keep digital records or submit them to HMRC.
Religious reasons
No internet access at home or place of business due to location and you are unable to get access at a suitable alternative location
An individual should consider if they are digitally excluded before applying. The eligibility for an exemption is based on the individual circumstances of the taxpayer.
If you are obligated to report under MTD, you will need to either find tax compatible software that allows you to hold digital records or have an agent that can prepare the quarterly updates and final tax return on your behalf. At Hill Dickinson LLP, we can help with this.
Part of the reporting obligation for MTD is that individuals will be required to send quarterly updates to HMRC. The updates will be based on the records and information processed by the tax software. The standard update periods are:
6 April to 5 July – deadline 7 August
6 April to 5 October – deadline 7 November
6 April to 5 January – deadline 7 February
6 April to 5 April – deadline 7 May
The quarterly updates are required for submission before the eventual self-assessment tax return is filed. HMRC have confirmed that they will not apply penalty points for late quarterly updates for the first 12 months. Penalty points will still apply for late tax returns.
Individuals can adjust any of the quarterly updates they send, prior to sending their final tax return.
Once the adjustments are made, a final tax return can be submitted to HMRC for processing. The normal filing deadline applies being 31 January following the end of the tax year.
Comment
Making Tax Digital will primarily affect self-employed individuals and landlords, with implementation deadlines dependent on an individual’s level of qualifying income. Those with qualifying income above £50,000 for the 2024/25 tax year should begin preparing now. While certain exemptions are available, including for those with qualifying income below £20,000 or where age, health or religious beliefs make compliance impractical, most affected taxpayers will be required to submit updates on a quarterly basis. Importantly, quarterly reporting will not replace the annual tax return, as a final year-end submission will still be required.
Find out more about our Wealth Planning and Structuring team or contact us today to discuss how we can help.
