When Does MTD for Income Tax Begin?
Making Tax Digital for Income Tax (MTD for ITSA) is being rolled out in stages, starting from April 2026. If you’re self-employed or earn rental income exceeding £50,000, you’ll be required to maintain digital records, submit quarterly updates to HMRC, and follow a new penalty regime.
Who Will Be Affected?
The initial phase targets self-employed individuals and landlords with a qualifying income over £50,000 annually. Then, from 6 April 2027, the threshold will lower to include those earning between £30,000 and £50,000. A new system of penalties for late filing and payment will also come into effect.
In the Spring Statement 2025, the government announced that from April 2028, MTD for income tax will apply to sole traders and landlords with income above £20,000. They are also reviewing how to approach taxpayers earning below £20,000.
How Will You Know if You Need to Comply?
Starting April 2025, HMRC will begin notifying individuals whose 2023-24 self-assessment tax returns indicate they are close to or over the £50,000 threshold. If your 2024-25 return confirms your qualifying income is above £50,000, you’ll be required to comply with MTD for income tax.
Voluntary Sign-Up Available
Even though MTD won’t be compulsory until 2026, eligible individuals can sign up early. This gives you the opportunity to get used to the system and help HMRC improve it. Note that eligibility criteria apply, and not everyone will qualify just yet. You can check your eligibility and register on GOV.UK.
If you choose to participate in the voluntary testing phase, late filing and payment penalties won’t apply.
How Will MTD Change Tax Return Submissions?
Once you’re mandated into MTD from 2026, you won’t be able to file your returns using the HMRC online portal. Instead, submissions must be made through compatible software. Don’t worry – we’ll continue handling your tax returns as usual, ensuring everything is submitted correctly and on time.
We’re currently reviewing which of our clients will be affected by MTD and will be reaching out soon. If you have any questions or would like to speak with a member of our team, feel free to get in touch at any time.