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)
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)
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)
Deadlines & Penalties
- Quarterly deadlines are 7 August, 7 November, 7 February, 7 May.(kpmg.com)
- Note: no late submission penalties in tax year 2026/27, even if you miss quarterly updates. The full penalty regime comes later.(kpmg.com)
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)
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)
Embracing MTD early, even if you're not yet required, can streamline compliance, improve financial visibility, and reduce last-minute errors.