The short answer: Making Tax Digital for Income Tax applies from 6 April 2026 to sole traders and landlords with qualifying income over £50,000, from April 2027 over £30,000 and from April 2028 over £20,000. Those affected must keep digital records, send quarterly updates and file a finalisation statement using compatible software.
Introduction
It is now over ten years since George Osborne, in the Spring 2015 Budget, announced his intention to make tax digital and, in the process, to "abolish the tax return altogether".
Making Tax Digital (MTD) for VAT became mandatory in 2022. After several delays, MTD for Income Tax (MTD IT) began being phased in from 6 April 2026. The changes are significant and involve a lot more reporting to HMRC than simply filing an annual tax return.
Who Is Affected and When
| Start date | Qualifying income over | Based on income for tax year |
|---|---|---|
| 6 April 2026 | £50,000 | 2024/25 |
| 6 April 2027 | £30,000 | 2025/26 |
| 6 April 2028 | £20,000 | 2026/27 |
Qualifying income is your total gross income from self employment and property before expenses, not your profit. The test looks back at an earlier tax year: HMRC uses the figures on the Self Assessment return for the tax year two years before the start date. For example, qualifying income above £30,000 in 2025/26 brings you into MTD from April 2027.
Quarterly Reporting
Once within MTD IT, quarterly updates of income and expenses are required for each three months of the tax year. Taxpayers can choose calendar quarters if that fits their records better. Each update is a cumulative total for the tax year to date, so earlier errors can be corrected in the next update.
Finalisation Statement
After the year end, a finalisation statement replaces the annual tax return. It includes adjustments to the quarterly figures, other income and claims for allowances and reliefs. The deadline is 31 January following the tax year.
HMRC's free online filing service is not available for those within MTD IT, so compatible software is required.
How We Can Help
We support sole traders and landlords across Hampshire and the UK with MTD compatible software such as Xero, quarterly submissions and year end finalisation. See our self assessment page or get in touch.