Making Tax Digital for Income Tax: What you need to know ahead of April 2026

HMRC continues to move forward with its long‑term plan to modernise the UK tax system through Making Tax Digital (MTD) – a programme designed to increase efficiency, reduce errors, and bring tax reporting closer to real time. The first major phase of MTD for Income Tax Self-Assessment (MTD ITSA) comes into effect from 6 April 2026 for those who meet the qualifying criteria. First submissions will be due by 7 August 2026 (further details on this below).

Who must join MTD and when?

From 6 April 2026, self‑employed individuals and landlords with gross annual income over £50,000 will be required to keep digital records and submit quarterly updates using HMRC compatible software.

This threshold is based on combined gross income from self‑employment and property. HMRC will determine whether you fall within the regime by reviewing your most recent tax return but will not sign you up automatically – you must complete the sign‑up process yourself or with the support of a tax agent.

Further phases will follow for those with income over £30,000 from April 2027, and over £20,000 from April 2028.

For family businesses or individuals with both self‑employment and rental income, this means now is the time to assess whether your total relevant income places you within scope for 2026.

For some taxpayers whose income levels technically bring them within the scope of MTD, certain complexities within their wider tax affairs may mean their mandatory date is deferred to a later year, or that they may qualify for an exemption altogether. In some cases, deferral or exemption will apply automatically; however, in other situations, an application will need to be submitted for the delay or exemption to be granted.

Digital record keeping and compatible software

The core requirement of MTD is the obligation to maintain digital records of relevant income and expenses through software that can communicate directly with HMRC’s systems.

This software will be used to:

• Record income and expenditure digitally
• Produce and submit quarterly updates
• Prepare and file your annual tax return

It is possible to continue using spreadsheets, but these must be linked to HMRC through recognised bridging software, if used.

Quarterly updates: a new way of reporting

Under the new system, affected taxpayers must submit quarterly summaries of their income and expenses to HMRC. These updates do not calculate the final tax liability; instead, they provide HMRC with real-time, summary-level data and help taxpayers understand their likely tax position throughout the year.

Separate updates will be required for each income source – for example, one for UK rental income and one for each self-employed activity.

Annual tax return submission

Despite the move to more frequent reporting, MTD does not remove the requirement to complete an annual tax return incorporating all income, gains and claims to tax relief for confirming the full and correct tax position for the year.

The current 31 January submission deadline remains for this; however, the preparation and submission will need to be done through MTD compatible software.

Understand the shift to digital reporting

The government’s objective is to reduce the tax gap caused by avoidable error.  While the initiative introduces new requirements for businesses, adopting digital tools can ultimately streamline compliance and provide clearer financial insights throughout the year. It also provides an opportunity to consider how the right digital tools can benefit your business by reducing overall admin and increasing financial visibility throughout the year.

Next steps

Preparing early will make the transition far smoother.

We have been engaging with HMRC and are fully equipped to support you through every stage of the MTD transition – from formal registration, identifying deferral and exemption qualifications, to software selection to quarterly submissions and year-end compliance. If you would like tailored guidance or help assessing your readiness, please get in contact.