Making Tax Digital for Income Tax: What You Need to Know for April 2026

30 April 2026 · Updated 20 October 2026 · Officium Business Services

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) launched on 6 April 2026, marking the biggest change to the Self-Assessment system since 1997. If you are self-employed or a landlord, this could directly affect how you record your income and report to HMRC. Here is everything you need to know.

What is Making Tax Digital for Income Tax?

Making Tax Digital (MTD) is HMRC’s programme to modernise the UK tax system by requiring digital record-keeping and more frequent reporting. MTD for VAT has applied to all VAT-registered businesses since April 2022. MTD for Income Tax is now rolling out in phases from April 2026, starting with the highest earners.

Who is affected and when?

MTD for Income Tax is being introduced in three phases based on gross qualifying income (self-employment and/or property rental income before expenses):

• Phase 1 — from 6 April 2026: sole traders and landlords with qualifying income above £50,000.
• Phase 2 — from April 2027: those with qualifying income above £30,000.
• Phase 3 — from April 2028: those with qualifying income above £20,000.

Qualifying income is gross self-employment income and gross property rental income combined. It does not include PAYE wages, investment income, dividends or pensions. Partnerships and limited companies are not currently affected.

What are the three core requirements?

1. Digital record-keeping: you must keep records of all business income and expenses digitally using MTD-compatible software. Paper records are no longer enough.
2. Quarterly updates: you must submit year-to-date income and expense summaries to HMRC four times a year. These are not full tax returns — they give HMRC more frequent visibility of your finances.
3. Final Declaration: after the tax year ends on 5 April, you must submit a Final Declaration by 31 January, confirming your final figures and adding any other income, replacing the current Self-Assessment return.

Quarterly reporting deadlines (2026/27 tax year)

Quarterly updates follow the tax year (6 April to 5 April) regardless of your own accounting year-end. The deadlines for 2026/27 are:

• Quarter 1: 6 April – 5 July 2026 → deadline 7 August 2026
• Quarter 2: 6 July – 5 October 2026 → deadline 7 November 2026
• Quarter 3: 6 October 2026 – 5 January 2027 → deadline 7 February 2027
• Quarter 4: 6 January – 5 April 2027 → deadline 7 May 2027
• Final Declaration: deadline 31 January 2028

Penalties for non-compliance

HMRC is introducing a new points-based penalty system for MTD. Each missed quarterly update or Final Declaration deadline earns one penalty point. Once four points have built up, a £200 penalty is issued. Further penalties apply for continued non-compliance.

What steps do you need to take?

1. Check whether your qualifying income is above £50,000 — if so, you are in scope from April 2026.
2. Sign up for MTD for Income Tax through HMRC’s online service before the start of the tax year you become eligible.
3. Choose and set up MTD-compatible software (such as QuickBooks, Xero, FreeAgent or similar) — our preference is Xero.
4. Start keeping all income and expense records digitally from the beginning of your first MTD period.
5. Speak to your payroll or tax adviser about how MTD interacts with any PAYE income or other income sources.

Exemptions

HMRC may grant exemptions in some circumstances, such as where a taxpayer is digitally excluded because of age, disability, religious grounds or lack of internet access. If you think you may qualify, contact HMRC directly.

• Making Tax Digital
• Quarterly updates
• Landlord tax
• Self-employed tax
• HMRC digital reporting