🗓️ What is MTD for Income Tax & When It Starts
Making Tax Digital for Income Tax Self‑Assessment (MTD ITSA) is the latest phase in HMRC’s drive to modernise tax processes. It requires eligible taxpayers to:
- Keep digital records of income and expenses,
- Submit quarterly digital updates to HMRC,
- Provide an annual digital declaration, replacing the traditional Self Assessment return
The first phase becomes mandatory on 6 April 2026, not 1 April. From this date, individuals whose qualifying income (gross earnings) from self-employment and/or property exceeds £50,000 in the 2024/25 tax year will need to comply.
Future phases will expand the scope:
- 6 April 2027: those earning over ÂŁ30,000 gross
- 6 April 2028: those with income over ÂŁ20,000 gross
đź‘Ą Who Will Be Impacted
| Income Bracket | When Required | Who |
|---|---|---|
| Over ÂŁ50,000 gross | From 6 April 2026 | Sole traders and landlords |
| £30,000–£50,000 gross | From 6 April 2027 | Sole traders and landlords |
| £20,000–£30,000 gross | From 6 April 2028 | Sole traders and landlords |
Only those meeting both criteria below are affected initially:
- Registered for Self Assessment as a sole trader or landlord.
- Qualifying income – the total gross income (before expenses/allowances) from self‑employment and/or property – exceeds the relevant threshold
It’s estimated that around 780,000 individuals will join in April 2026, with another 970,000 in 2027
âś… What You Need to Do to Prepare
1. Check Eligibility
Use HMRC’s eligibility checker on GOV.UK to confirm if and when you’re due to join MTD ITSA
2. Choose Compatible Software
You’ll need functional-compatible software (or bridging software) to keep digital records and file updates. Check the HMRC list or ask your software provider (e.g., Xero, QuickBooks)
3. Sign Up Before 6 April 2026
Even though MTD becomes mandatory in April 2026, HMRC is offering a soft sign-up and testing phase now. Starting early gives you time to learn the process and avoid penalties.
4. Keep Quarterly Digital Records
From 6 April 2026, maintain accurate digital records and submit four quarterly updates to HMRC. These updates will include income and expense summaries and provide HMRC with a running estimate of your tax liability.
5. Submit Annual Digital Declaration
After your fourth quarterly update, submit a final digital declaration, covering your full tax year, with any necessary adjustments or reliefs.
6. Stay Aware of Penalties
Late or missing submissions may incur penalties, with fines set to increase from April 2025. Quarterly deadlines are critical; calendar them in your diary.
💡 Why It Matters – Benefits & Precautions
Pros:
- Better cash‑flow management: Quarterly updates help you spread out tax payments and avoid an end-of-year scramble .
- More accurate records, fewer errors, and improved tax compliance .
Cons:
- Initial time and cost investment in software and training.
- Missing deadlines or incorrect updates may result in fines.
How Indie Can Help you with MTD
Simplifying Making Tax Digital – We’re Here to Help
Navigating Making Tax Digital (MTD) doesn’t have to be stressful. We’re here to make the transition smooth and straightforward.
We can help you:
- Choose and set up the right software tailored to your needs
- Provide guidance and support so you can confidently file your own returns
- Or, if you’d prefer, we’ll handle the entire process for you, ensuring you stay compliant without the hassle
Whether you want to stay hands-on or hand everything over, we’ll make sure you’re MTD-ready and fully supported every step of the way.
Contact Us to discuss how we can support you with Making Tax Digital.