Tax Planning
Making Tax Digital (MTD) for Income Tax: Phased Roll-Out and What Small Businesses & Landlords Must Know
MTD for Income Tax is now live for higher-income self-employed and landlords, with thresholds set to fall through 2028—this article explains timelines, exemptions, and best practices.
By NomadicTax Research Team • 5-8 min read • June 8, 2026
## Background & Scope
Making Tax Digital for Income Tax (MTD for ITSA) officially began on **6 April 2026** for self-employed individuals and landlords with **qualifying income over £50,000**. Those with income above £30,000 will join from April 2027, and the threshold will further reduce to **£20,000 from April 2028**.([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
### Who is affected?
- Sole traders and landlords with gross income **from trading or property** exceeding the threshold.
- Property from UK or overseas both count.
- Partnerships are expected to join later; several exemption categories apply.([kpmg.com](https://kpmg.com/uk/en/insights/tax/tmd-making-tax-digital-for-income-tax-is-now-live.html?utm_source=openai))
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## What you must do under the regime
- Keep **digital records** using MTD-compatible software.
- Submit **quarterly updates** of income and expenses.
- Finalise the year with an end‐of-year return by **31 January** following the end of the tax year.([kpmg.com](https://kpmg.com/uk/en/insights/tax/tmd-making-tax-digital-for-income-tax-is-now-live.html?utm_source=openai))
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## Deadlines & Penalties
- Quarterly deadlines are **7 August, 7 November, 7 February, 7 May**.([kpmg.com](https://kpmg.com/uk/en/insights/tax/tmd-making-tax-digital-for-income-tax-is-now-live.html?utm_source=openai))
- Note: **no late submission penalties** in tax year 2026/27, even if you miss quarterly updates. The full penalty regime comes later.([kpmg.com](https://kpmg.com/uk/en/insights/tax/tmd-making-tax-digital-for-income-tax-is-now-live.html?utm_source=openai))
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## Example scenarios
- Alice is a landlord with gross rent income of £55,000 and some self-employment earnings. From 6 April 2026, she must use MTD for ITSA.
- Bob earns £35,000 in property and trading income; he remains out of scope until 6 April 2027 unless income increases or other sources push him over threshold.
- Carol has multiple income sources, some second jobs or partner-share profits; her obligation depends on qualifying income total exceeding threshold. Exemptions if special circumstances apply.([kpmg.com](https://kpmg.com/uk/en/insights/tax/tmd-making-tax-digital-for-income-tax-is-now-live.html?utm_source=openai))
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## Best practices & action items
- Audit your **accounting period** and income threshold now. Some taxpayers may be able to delay or apply for deferral if legitimate reasons.
- Choose software compatible with HMRC’s requirements; test bank feeds and digital connections ahead of deadlines.
- Maintain detailed inflation for property accounts and expense claims to support accurate quarterly updates.
- Use HMRC’s testing programmes and guidance to familiarise yourself with new flows.([gov.uk](https://www.gov.uk/government/news/one-year-until-making-tax-digital-for-income-tax-launches?utm_source=openai))
Embracing MTD early, even if you're not yet required, can streamline compliance, improve financial visibility, and reduce last-minute errors.