MTD for Income Tax 2026: What You Need to Know
Making Tax Digital for Income Tax (MTD for ITSA) is now live. As of April 2026, self-employed individuals and landlords with qualifying income above £50,000 are required to keep digital records and submit quarterly updates to HMRC using compatible software.
If you fall into this group, the time for preparation is over — you need to be set up and compliant right now. If your income is between £30,000 and £50,000, you have until April 2027, but getting ready early is strongly advised.
This article explains everything you need to know about MTD for Income Tax in 2026.
What Is MTD for Income Tax?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC's programme to digitise the UK tax system. Instead of filing a single Self Assessment tax return at the end of the year, affected taxpayers must now:
- Keep digital records of their income and expenses using HMRC-recognised software
- Submit quarterly updates to HMRC throughout the tax year
- File an End of Period Statement (EOPS) after each tax year to finalise their business income
- Submit a Final Declaration to confirm their overall tax position (replacing the traditional tax return)
The goal is to reduce errors, give taxpayers a clearer picture of their tax position in real time, and modernise the tax system.
Who Must Comply From April 2026?
The first phase of MTD for Income Tax applies to individuals who meet both of these criteria:
- They are self-employed and/or receive property income (as a landlord)
- Their gross income from self-employment and/or property exceeds £50,000 per year
This threshold is based on your total qualifying income, not your profit. So if your turnover from self-employment is £55,000 but your profit after expenses is only £30,000, you are still caught by the £50,000 threshold.
What About the £30,000 Threshold?
From April 2027, the threshold drops to £30,000. If your qualifying income is between £30,000 and £50,000, you have one more year before you must comply — but there is no reason not to start early.
Partnerships and Limited Companies
Partnerships are expected to be brought into MTD for ITSA at a later date. Limited companies are already covered by separate MTD for Corporation Tax plans. If you operate through a limited company, MTD for ITSA does not currently apply to you.
Key Dates for 2026-27
Here are the important dates for the first year of MTD for Income Tax:
| Period | Covers | Deadline |
|---|---|---|
| Quarter 1 | 6 April – 5 July 2026 | 7 August 2026 |
| Quarter 2 | 6 July – 5 October 2026 | 7 November 2026 |
| Quarter 3 | 6 October – 5 January 2027 | 7 February 2027 |
| Quarter 4 | 6 January – 5 April 2027 | 7 May 2027 |
| End of Period Statement | Full year | 31 January 2028 |
| Final Declaration | Full year | 31 January 2028 |
Each quarterly update must be submitted within one month of the quarter ending. For a detailed breakdown of the quarterly reporting process, see our guide on HMRC quarterly reporting.
What Changes Compared to Self Assessment?
Under the old Self Assessment system, you filed one return per year — typically by 31 January following the end of the tax year. Under MTD for Income Tax:
- You interact with HMRC five or six times per year instead of once
- Your records must be kept in digital format from day one — not compiled at year end
- You need compatible software that can communicate with HMRC's systems via their API
- HMRC gets a running picture of your income, which means fewer surprises at year end
The Final Declaration replaces the Self Assessment tax return. You still confirm your tax position at the end of the year, but the quarterly updates mean much of the work is already done.
What Software Do You Need?
To comply with MTD for Income Tax, you need software that is:
- HMRC-recognised — it must be able to connect to HMRC's MTD APIs
- Capable of storing digital records — your income and expense records must be held digitally
- Able to submit quarterly updates — the software must generate and send the required submissions
Some taxpayers try to use spreadsheets linked to bridging software, but for most people, dedicated MTD software is simpler and less error-prone. Our comparison of the best MTD software for sole traders covers the main options.
ClearMTD is built specifically for MTD for Income Tax. It handles digital record keeping, quarterly submissions, and your Final Declaration — without the complexity of full accounting software. Sign up for free and see how straightforward MTD compliance can be.
How to Prepare If You Are Already Affected
If your income is above £50,000 and you have not yet set up for MTD, you need to act now:
- Register for MTD for ITSA with HMRC — this is separate from your existing Self Assessment registration
- Choose compatible software — make sure it handles quarterly submissions and connects to HMRC
- Start keeping digital records immediately — backfilling records later is painful and risky
- Understand the quarterly deadlines — set reminders for each submission date
- Talk to your accountant if you use one — they need to know you are in the MTD regime
What Happens If You Do Not Comply?
HMRC has introduced a new points-based penalty system for late submissions. Each time you miss a quarterly deadline, you receive a penalty point. Once you accumulate a certain number of points, you receive a financial penalty.
There are also separate penalties for late payment of tax. For full details, see our article on MTD penalties for late submission.
Frequently Asked Questions
Do I need MTD software if I earn under £50,000?
Not yet. If your qualifying income is between £30,000 and £50,000, MTD for Income Tax will apply to you from April 2027. If you earn under £30,000, there are currently no confirmed plans to bring you into the scheme, although this may change in future.
Can I still file a Self Assessment return?
If you are mandated into MTD for Income Tax, you must use compatible software to submit quarterly updates and a Final Declaration. The traditional Self Assessment return is replaced by this process. If you are not yet mandated (income below the threshold), you continue filing Self Assessment as normal.
Does MTD for Income Tax apply to landlords?
Yes. If you receive property income (rent) and your total qualifying income exceeds the relevant threshold (£50,000 from April 2026, £30,000 from April 2027), you must comply with MTD for Income Tax. This applies whether you are a sole trader landlord or have property income alongside self-employment income.
What counts as "qualifying income"?
Qualifying income for MTD for ITSA is your gross income from self-employment and/or property, before deducting expenses. Employment income, dividends, and savings interest are not included in this calculation.
Is there a grace period for the first year?
HMRC has indicated it will take a proportionate approach to penalties in the first year, but there is no formal grace period. You are expected to comply from day one. Getting set up early and familiarising yourself with the process is the safest approach.
The Bottom Line
MTD for Income Tax is here. If you earn over £50,000 from self-employment or property, you are now required to keep digital records and file quarterly with HMRC. The system is new, but the requirements are clear — and the right software makes the whole process manageable.
ClearMTD is designed to make MTD compliance simple, affordable, and stress-free. Create your free account and start your first quarterly update today.