Table of Contents
- What is MTD for Income Tax (in plain English)?
- Who must comply with MTD for Income Tax?
- MTD for Income Tax start dates (2026–2028)
- What counts towards the thresholds? (Qualifying income explained)
- What will you actually have to do under MTD ITSA?
- Does MTD mean you pay tax quarterly?
- What if you’re under the threshold?
- How to prepare now (without overwhelming yourself)
- Common questions we hear (and honest answers)
- Important dates to keep on your radar
- What we recommend at Tax Digital
- Related reading
Making Tax Digital for Income Tax (often shortened to MTD for Income Tax or MTD ITSA) is being phased in from April 2026. If you’re self-employed and/or a landlord, the key question is simple: when do you have to start? The answer depends on your qualifying income and the staged rollout dates set by HMRC.
This guide explains who must comply, the £50k / £30k / £20k thresholds, and what the new process looks like in practice—so you can feel clear, prepared, and in control.
What is MTD for Income Tax (in plain English)?
MTD for Income Tax changes how you keep records and how you send updates to HMRC. Instead of doing everything once a year, you’ll be expected to:
Confused by the new MTD rules?
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Get a Free Compliance Check- Keep digital records of your business and/or property income and expenses
- Send quarterly updates to HMRC (summaries of income and expenses)
- Complete an end-of-year finalisation to confirm your figures and submit your final tax position
It’s important to know that quarterly updates are not tax returns. They are updates. Your final tax bill is still based on the year-end position once everything is confirmed.
Who must comply with MTD for Income Tax?
MTD for Income Tax applies to people who currently file a Self Assessment tax return and have:
- Self-employment income (sole traders)
- Property income (UK landlords)
- Or both
The rollout is based on your qualifying income (explained below). If you meet the threshold for your start date, you’ll need to follow MTD ITSA rules from that tax year onwards.
Does it apply to limited companies?
Not for MTD for Income Tax. Limited companies don’t pay Income Tax on company profits—they pay Corporation Tax. So MTD ITSA is mainly a change for sole traders and landlords.
If you run a limited company as well as having self-employed or rental income, you may still need to join MTD ITSA for those personal income streams.
MTD for Income Tax start dates (2026–2028)
HMRC is introducing MTD ITSA in stages, based on your annual qualifying income:
| Start date | Who must comply | What it means |
|---|---|---|
| April 2026 | Qualifying income over £50,000 | Digital records + quarterly updates begin for the 2026/27 tax year |
| April 2027 | Qualifying income over £30,000 | Same rules apply from 2027/28 onwards |
| April 2028 | Qualifying income over £20,000 | Same rules apply from 2028/29 onwards |
What counts towards the thresholds? (Qualifying income explained)
The thresholds are based on qualifying income, which is broadly your gross income (turnover) from:
- Self-employment (sole trader) income, and/or
- UK property income (rent received)
This is before deducting expenses. In other words, it’s not your profit figure.
Examples (to make it real)
Example 1: Sole trader only
You have turnover of £52,000 and expenses of £20,000. Your qualifying income is £52,000, so you fall into the April 2026 start group (even though your profit is lower).
Example 2: Landlord + sole trader combined
You have self-employed income of £28,000 and rental income of £6,000. Combined qualifying income is £34,000, so you’re likely in from April 2027.
If you have multiple self-employments, or multiple rental properties, HMRC looks at the total qualifying income across those sources.
What will you actually have to do under MTD ITSA?
Most people hear “quarterly reporting” and worry it means four tax returns a year. It doesn’t—but it does mean a new routine.
1) Keep digital records
You’ll need to record your income and expenses in a digital format. In practice, that usually means using:
- MTD-compatible accounting software, or
- A spreadsheet plus a bridging tool (where appropriate)
Digital records should be kept up to date, with sensible supporting evidence (invoices, receipts, bank statements). You don’t need to scan every piece of paper, but you do need a reliable system that stands up to HMRC checks.
2) Send quarterly updates
Each quarter, you’ll send a summary of income and expenses to HMRC. These are often called quarterly updates. They help HMRC build a picture of your year as it happens.
Quarterly updates are based on the tax year (6 April to 5 April), not the calendar year. Many people will follow these periods:
- 6 April to 5 July
- 6 July to 5 October
- 6 October to 5 January
- 6 January to 5 April
Your software will guide the exact deadlines, and you can choose different accounting periods in some cases. The key is consistency and meeting submission dates.
3) Do the year-end finalisation
After the tax year ends, you’ll confirm your final figures and make any adjustments you’d normally do on a Self Assessment return (for example, capital allowances, private use adjustments, and relief claims). This is sometimes described as:
- End of Period Statement (EOPS) for each business/property source, and
- A Final Declaration to confirm everything for the year
Think of it as the point where you say: “These are the final, correct numbers for the year.” That’s when your tax position is properly finalised.
Does MTD mean you pay tax quarterly?
No—MTD ITSA is about reporting, not changing the tax payment schedule by itself.
At the moment, many self-employed people and landlords pay through Payments on Account (usually in January and July), plus any balancing payment in January. MTD doesn’t automatically replace that.
That said, HMRC has been exploring wider reforms to payment timing (sometimes called “pay as you go”). If anything changes in the future, we expect plenty of notice. For the 2026–2028 rollout, the main change is digital records and quarterly submissions.
What if you’re under the threshold?
If your qualifying income is below the relevant threshold, you’re not expected to join MTD ITSA at that stage.
However, two points matter in practice:
- Income can rise. If your turnover increases above a threshold, you may be brought into MTD at the next mandated start date for your band.
- Voluntary adoption may be possible. Some people choose to move earlier to get used to the process, especially if they prefer modern software and want cleaner records.
If you’re hovering around £20,000–£30,000, it’s sensible to start building good digital habits now, even if you’re not mandated yet.
How to prepare now (without overwhelming yourself)
The best preparation is calm, practical, and step-by-step. You don’t need to do everything at once, but you do need a plan.
Step 1: Work out your likely start date
Look at your most recent tax return figures and estimate your turnover for the current year. If you have both self-employed and rental income, add them together (gross amounts).
If you’re likely to be:
- Over £50,000 — plan for April 2026
- Over £30,000 — plan for April 2027
- Over £20,000 — plan for April 2028
Step 2: Choose a record-keeping method that you’ll actually stick to
Most compliance problems come from systems that are too complicated or too time-consuming. A good setup is one you can maintain in real life.
For many people, that means:
- A separate business bank account (or at least a dedicated account for rental income)
- Simple categories for income and costs
- Regular weekly or monthly check-ins, rather than a big scramble at year end
Step 3: Build a quarterly routine
Quarterly updates work best when you treat them as a light-touch admin routine. For example:
- Set aside 30–60 minutes each month to keep records tidy
- Reconcile bank transactions regularly
- Chase missing invoices/receipts while they’re still easy to find
This approach usually reduces stress and improves accuracy—especially if you’ve previously relied on a year-end catch-up.
Common questions we hear (and honest answers)
If you have income and expenses in that quarter, submitting nil updates would be incorrect. Quarterly updates are meant to reflect what’s happened in the period. HMRC will expect submissions to be broadly consistent with your records.
That said, quarterly updates don’t have to be perfect down to the penny. The year-end finalisation is where you confirm the final figures and adjustments. The goal is reasonable, timely reporting backed by proper digital records.
You’ll need a digital method that can submit updates to HMRC. For most people, that means MTD-compatible accounting software. In some situations, spreadsheets can still play a part, but they usually need a bridging solution to submit the data.
If you’re comfortable with spreadsheets, we can help you decide whether a spreadsheet-based workflow is realistic for MTD—particularly once quarterly deadlines are in play.
HMRC has been moving towards a points-based penalty system for late submissions. The exact application for MTD ITSA will depend on HMRC’s final rules and guidance, but the direction of travel is clear: regular deadlines mean regular compliance expectations.
The best protection is a simple process and enough time to review each quarter before you submit.
Software is great at storing data and submitting forms. It doesn’t replace judgement. Many people find they still want support with:
- Claiming the right expenses and reliefs (and avoiding the wrong ones)
- Handling private use adjustments correctly
- Year-end finalisation and keeping everything consistent
- Planning ahead for cash flow and tax payments
If you’re confident and your affairs are simple, you may do more yourself. If your income is mixed, you’re busy, or you just want peace of mind, an accountant remains genuinely helpful.
Important dates to keep on your radar
Here are the headline dates again, with the practical meaning:
- From April 2026 — MTD ITSA mandated for qualifying income over £50,000
- From April 2027 — MTD ITSA mandated for qualifying income over £30,000
- From April 2028 — MTD ITSA mandated for qualifying income over £20,000
If you’re in the first wave (April 2026), the sensible time to get your systems in place is well before April 2026, so you’re not trying to change your record-keeping mid-year.
What we recommend at Tax Digital
We focus on helping self-employed people and landlords feel confident with MTD—without drowning in admin. In practical terms, that usually means:
- Confirming your likely MTD start date based on your income sources
- Setting up a clean digital record-keeping system that suits how you work
- Creating a simple quarterly routine so deadlines don’t creep up
- Handling the year-end finalisation properly, so the final tax position is correct
If you’d like, we can also sanity-check your numbers against the thresholds and talk you through what “good enough” looks like for quarterly updates—so you can comply confidently, without overcomplicating it.
Related reading
We’ll add relevant guides here as our MTD ITSA library grows.
