With the rollout of Making Tax Digital for Income Tax (MTD ITSA) starting in April 2026, it’s natural to have questions. Whether you’re a landlord, self-employed, or advising clients, understanding what’s changing and how it affects you is key.
We’ve pulled together answers to the most common questions from our recent webinar with HMRC, covering everything from who’s affected to how quarterly submissions will work.
If you’re still unsure or want tailored advice, get in touch. We’re here to help.
Table of Contents
General Questions
How does MTD change Income Tax?
There are 3 key changes with MTD for Income Tax:
- Digital record keeping (See Digital record keeping FAQs)
- Quarterly Updates (See Quarterly updates FAQs)
- Annual Digital Tax Return (See End of year FAQs)
If I’m not affected by MTD for Income Tax based on the qualifying criteria are there any changes I need to be aware of?
No. MTD for Income Tax only applies to individuals meeting the qualifying criteria. If you currently complete a Self-Assessment Tax return but do not qualify under MTD then you will continue as normal submitting your Self-Assessment Tax return.
Who and When
Who does MTD for Income Tax impact?
MTD for Income Tax will impact Self-Employed individuals and Landlords with gross qualifying income above the relevant thresholds for MTD for Income Tax. (See Qualifying income FAQ)
What is qualifying income?
Qualifying income is the Revenue NOT Profits derived from Self-Employment or Property income. If you own property jointly, it will be your share of the property income and not the income as a whole. For property income this is both UK and Foreign property income.
It is also worth noting that qualifying income is the combined total of your income sources not individually. Therefore if you have both Self-Employment and Property income it will be the total of both when looking at your qualifying income.
What are the income thresholds?
- From April 2026 for those with qualifying income over £50,000 will need to comply with MTD for Income Tax.
- From April 2027 for those with qualifying income over £30,000 will need to comply with MTD for Income Tax.
- From April 2028 for those with qualifying income over £20,000 will need to comply with MTD for Income Tax.
What if my income is below £20,000?
Nothing has been confirmed regarding MTD for taxpayers with qualifying income below £20,000.
However, at Spring Statement 2025 the Government announced its intention to “continue to explore how we can best bring the benefits of digitalisation to a greater proportion of the 4 million sole traders and landlords who have income below the £20,000 threshold.”
What about Partnerships and Limited Companies?
These revenue streams are on HMRC’s long term roadmap for MTD, dates are yet to be confirmed.
When do these changes come in?
The date from which you have to comply with MTD depends on your qualifying income.
Income threshold | Mandation date |
Qualifying income over £50,000 | April 2026 |
Qualifying income over £30,000 | April 2027 |
Qualifying income over £20,000 | April 2028 |
Qualifying income below £20,000 | Not currently in scope |
I’m registered for MTD for VAT already, do I now need to file for MTD for Income Tax as well?
MTD for VAT and for Income Tax are treated separately, therefore you will be required to sign up for MTD for Income Tax as well if you meet the qualifying criteria.
If you have other qualifying income in addition to your VAT registered income, then this would also need to be submitted as part of the Quarterly updates, for example, you have Self-Employment income you are filing VAT returns for, you would then also need to report any property income in addition on your Quarterly update from an MTD for Income Tax perspective.
If your VAT periods and Income tax periods are aligned then it should be possible to submit the VAT return and Income tax update at the same time.
My MTD for VAT periods aren’t the same as the MTD for Income Tax periods, what happens here?
There would be separate submissions for each tax as they are treated separately for MTD purposes. Therefore if you VAT filing deadlines and your Income tax deadlines were different you would have to submit each tax according to their deadline. You can of course align the VAT quarter to fall in line with the Income tax quarters should you wish.
Exemptions
What exemptions are available?
Automatic exemptions
- You’re automatically exempt and cannot sign up for Making Tax Digital if you are a:
- trustee, including a charitable trustee or a trustee of non-registered pension schemes
- person that does not have a National Insurance number — this only applies for a tax year where you do not have a National Insurance number on 31 January before the start of that tax year
- personal representative of someone who has died
- Lloyd’s member, in relation to your underwriting business
- non-resident company
If you are automatically exempt, you will not need to apply for an exemption.
Exemptions you can apply for:
You could be able to claim exemption from MTD for Income Tax if any of the following apply:
- It’s not reasonably practicable for you to use digital tools to keep your business records or submit quarterly returns due to age, disability, remoteness of location or any other reason (often referred to as ‘digital exclusion’).
- You are subject to an insolvency procedure.
- Your business is run entirely by practising members of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records.
Where any of the above apply, you will have to apply to HMRC to claim an exemption, with HMRC having 28 days to either grant or deny the application.
These exemptions mirror those applicable to MTD for VAT. If you have already qualified for an exemption from MTD for VAT, you will also be exempt from MTD for Income Tax without needing to apply for exemption again.
How do I apply for an exemption?
Making Tax Digital for Income Tax is currently in a voluntary sign up period. HMRC will confirm how to apply for an exemption when mandated.
Signing up for MTD for Income Tax
What years’ qualifying income counts towards the April 2026, 2027 and 2028 mandation dates?
The thresholds for each phase of MTD mandation will be assessed against the gross qualifying income reported on the most recent tax return filed prior to the mandation date (assuming all returns are filed on time).
For instance, 2024/25 tax returns will be due for submission by 31 January 2026. If that return reports gross qualifying income of more than £50,000, that individual will have to join MTD from April 2026.
Will HMRC tell me if I need to register for MTD?
HMRC are writing to taxpayers during spring / summer 2025 where the amount of qualifying income declared on their 2023/24 tax return implies they may need to comply with MTD in future, assuming their income remains at a similar level in 2024/25.
HMRC will then follow up following the submission of the 2024/25 tax return to confirm whether you are in scope for MTD in April 2026 based on your gross qualifying income for 2024/25. If you submit your tax return in plenty of time, you will have time to plan for your MTD approach, if you wait until January 2026 before filing your tax return, you will only have a couple of months in order to plan ahead.
Will HMRC register me for MTD?
No, HMRC will not register taxpayers within scope of MTD automatically. If your income meets the relevant threshold, you will need to sign up to use MTD yourself.
How do I register for MTD?
Making Tax Digital for Income Tax is currently in a voluntary sign up period. You may be able to sign up to test and develop the service as part of their BETA if you meet their testing criteria.
You can sign up voluntarily if (all of the following):
- your personal details are up to date with HMRC
- you’re a UK resident
- you have a National Insurance number
- you have submitted at least one Self-Assessment tax return
- you’re up to date with your tax records — for example, you have no outstanding tax liabilities
- you use an accounting period that runs from either:
- 6 April to 5 April
- 1 April to 31 March — you must make sure your software can support this accounting period.
HMRC will confirm how to register outside of this in due course.
Leaving MTD
What if my income falls below the MTD threshold?
Once you are mandated into MTD, you will only become exempt if your qualifying income falls below the MTD income threshold for three consecutive tax years (based on filed tax returns, or quarterly updates where the deadline has not yet passed for filing the return for a year).
Quarterly Updates
What are the filing deadlines?
You have 1 month and 7 days following the quarter end to submit the quarterly update.
| Period covered | Filing deadline |
Quarterly update 1 | 6 April – 5 July | 7 August |
Quarterly update 2 | 6 April – 5 October | 7 November |
Quarterly update 3 | 6 April – 5 January | 7 February |
Quarterly update 4 | 6 April – 5 April | 7 May |
What information is filed with HMRC?
Your income and expenses totals are what is submitted to HMRC only, the underlying transactional information is not submitted to HMRC as part of the Quarterly update.
Do Quarterly updates mean Quarterly payments?
HMRC have confirmed that quarterly payments are not in the current scope of MTD or been discussed as a requirement.
What if I make a mistake?
As the Quarterly submissions are filed on a cumulative basis for the tax year, any mistakes can be corrected and filed within the subsequent quarter.
If my quarterly updates are significantly different to my final figures is there a red flag to HMRC?
HMRC have confirmed this will not be the case. The end of year Annual Digital Tax Return is expected to vary from the cumulative Quarterly updates as year end adjustments will be made at this stage.
End of year submission
Do I still need to file a Tax Return?
You will still be required to file an annual tax return, it will be renamed the Annual Digital Tax Return and will still be due for filing by the 31 January each year.
What is included on the Annual Digital Tax Return?
The Annual Digital Tax Return will include:
- Any year end adjustments to the quarterly update income and expenses such as prepayments, accruals or other adjustments not required in the Quarterly Updates.
- All other taxable income not required under MTD such as (but not limited to) Employment income, Dividends, Interest etc.
Penalties
Are there any penalties?
Penalties for late submissions and late payment for taxpayers within MTD will move to a points based system, similar to the rules for VAT.
Taxpayers in MTD will receive a point each time they miss a submission deadline (quarterly updates and year end submission). Points accumulate until a threshold is reached, at which point a £200 penalty will be issued. From that point onwards, any further late submissions will result in an immediate £200 penalty.
To ‘reset’ the penalty position, the taxpayer will need a set period of compliance (4 quarterly updates, or 2 end of year returns) and to have submitted all returns required for the previous 24 months.
Penalties for VAT and MTD will be treated separately.
The existing Self-Assessment penalty regime will continue to apply until you join MTD, and for taxpayers outside the scope of MTD.
Digital record keeping
Do I need special software?
You will need to have MTD compliant software in order to submit your Quarterly updates with HMRC to meet the MTD requirements. This can either be a software solution that is compliant or an MTD bridging solution that meets the filing requirements.
What software is MTD for Income Tax compliant?
You can find a list of MTD compliant software using the link below which is regularly updated by HMRC.
Find software that works with Making Tax Digital for Income Tax – GOV.UK
Do I need one software to do everything?
No, you can have separate filing software for your different income streams as well as the end of year Annual Digital Tax Return which may be submitted by your Accountant using their tax filing software.
I already have software, do I need to change it?
If you already use accounting software to maintain your records it’s worth asking your software provider if their software will also let you prepare and submit MTD for Income Tax submissions just in case they won’t be compliant for both taxes.
Are spreadsheets still ok?
Yes, Spreadsheets are acceptable for MTD for Income Tax assuming they are MTD enabled or filed using Bridging software.
Will HMRC be providing MTD software?
No. HMRC have confirmed as with MTD for VAT they will not be providing MTD software solutions.
