Making Tax Digital for Income Tax (MTD for ITSA) starts on 6 April 2026. MTD for Income Tax Self-Assessment is one of the biggest changes to UK tax reporting in decades.
From 6 April 2026, many self employed individuals and landlords will need to submit quarterly digital updates instead of a single annual tax return.
In this guide, everything is explained in plain English. Specifically, it covers who must comply, key deadlines, penalties, software requirements, and how to prepare step by step.
Why HMRC is introducing MTD for income tax
HMRC estimates that billions of pounds are lost each year due to errors in tax returns. As a result, many individuals face incorrect tax bills and unexpected penalties.
To address this, Making Tax Digital aims to improve accuracy and visibility. In particular, it is designed to:
- Reduce tax errors
- Encourage digital record keeping
- Provide more up to date financial information
- Help taxpayers better understand their finances
When MTD for income tax starts
MTD for income tax will be introduced in phases. Importantly, the start date depends on your turnover level.
| Tax year reviewed | Turnover threshold | MTD start date |
|---|---|---|
| 2024 to 2025 | Over £50,000 | 6 April 2026 |
| 2025 to 2026 | Over £30,000 | 6 April 2027 |
| 2026 to 2027 | Over £20,000 | 6 April 2028 |
Who must join MTD for income tax
You will need to join MTD if you fall into one of the following categories:
- Self-employed individuals
- Landlords with UK property income
- Individuals whose combined turnover exceeds the threshold
In this context, turnover includes:
- Business income
- Rental income
- The combined total of all sources
Who does not need to join
However, some individuals will not need to comply. For example, you are exempt if:
- Your turnover is below the threshold
- You operate solely through a limited company
- You qualify for digital exemption due to age, disability, or religious reasons
Turnover vs profit explained
It is important to understand that MTD is based on turnover, not profit.
- Turnover is the total income received before expenses
- Profit is what remains after expenses
For example, if your income is £60,000 and your expenses are £40,000, your profit is £20,000. However, you would still need to comply because your turnover exceeds the threshold.
Quarterly updates under MTD for income tax
Under the new system, you will submit four updates each tax year. These updates, in turn, provide a summary of your financial activity.
Each submission includes:
- Total income
- Total expenses
- A summary of business performance
The deadlines are as follows:
- 6 April to 5 July, due by 7 August
- 6 July to 5 October, due by 7 November
- 6 October to 5 January, due by 7 February
- 6 January to 5 April, due by 7 May
Final declaration
In addition to quarterly updates, you will need to submit a final declaration at the end of the tax year. This, in effect, replaces the traditional Self Assessment tax return.
Therefore, although reporting becomes more frequent, the year-end process becomes more streamlined.
Digital record-keeping requirements
To comply with MTD, you must maintain digital records throughout the year. As a result, these records must be accurate and up to date.
You will need to keep:
- Income records
- Expense records
- Transaction dates
- Expense categories
- Relevant business details
What counts as digital records
There are several acceptable ways to store your records. For example, you can use:
- Accounting software
- Spreadsheets such as Excel or Google Sheets
- Digital bank statements
- Apps connected to your bank
Software options for MTD
When choosing software, it is important to select a solution that suits your needs. In most cases, there are two main options:
- Bridging software, which is lower cost and links spreadsheets to HMRC
- Full accounting software, which is recommended for ease and efficiency
Penalties under MTD for income tax
MTD introduces a points-based penalty system. Each missed submission results in one penalty point. Once you reach four points, a £200 fine is issued.
In addition, late payment penalties may apply. These, in turn, can include interest charges and further financial penalties.
Benefits and challenges of MTD
Although MTD introduces new requirements, it also offers several benefits.
Benefits include:
- Better financial visibility
- Fewer tax errors
- More timely business insights
- Reduced reliance on paperwork
However, there are also challenges:
- More frequent reporting
- Strict submission deadlines
- The need to adopt digital tools
Summary of key points
In summary, there are several important changes to be aware of:
- MTD for income tax starts from 6 April 2026
- Quarterly digital updates are required
- A final declaration replaces the annual tax return
- Turnover determines whether you must comply
- Penalties apply for late submissions
- Digital record-keeping is mandatory
How we can help
Preparing for MTD can feel like a significant change. However, with the right support, it can be straightforward and manageable.
If you would like guidance tailored to your situation, contact us to see how we can help you prepare with confidence.
Or, further information can be found at the Gov.UK website
