What is Making Tax Digital (MTD) for Income Tax?
Introduced in April 2026, MTD for Income Tax requires sole traders and landlords with annual income over £50,000 from self-employment or property to use HMRC-recognised digital software to keep records and send quarterly updates of income and expenses, plus the usual annual Self Assessment return. (gov.uk)
Who is affected and deadlines
| Group | Income Threshold | First Quarterly Update Due | First Self Assessment Return Under MTD |
|---|---|---|---|
| Sole traders / landlords earning £50,000+ in 2024-25 | £50,000+ | 7 August 2026 | 31 January 2028 (gov.uk) |
What you need to do now: Actionable steps
- Choose recognised software: Ensure it’s HMRC-compliant. Avoid manual systems or home-grown spreadsheets.
- Start digital record-keeping immediately: Capture all income and expense transactions in the software.
- Learn the quarterly reporting schedule: Four updates per year, even though you also file annually.
- Gather evidence and support: Keep receipts, invoices, bank statements—all digital or digitised.
Practical example
Sara is a landlord with £60,000/year income. She chooses an HMRC-approved cloud accounting package in May 2026. She logs every expense digitally. Her first quarterly submission for April-June needs to be made by 7 August 2026. She’ll still file her annual return by 31 Jan 2028, but her software will help pre-fill data from her quarterly updates.
Benefits and challenges
Benefits:
- Less last-minute stress at year-end
- More accurate financial picture throughout the year
- Fewer penalties if submissions are timely and accurate
Challenges:
- Cost of software and learning curve
- Time spent organizing historic data
- Ensuring software stays updated and compatible
Conclusion
If you’re in that income bracket, MTD isn’t optional—it’s now part of UK law for Income Tax. By acting early—setting up software, cleaning records, and staying current with updates—you’ll stay compliant, avoid penalties, and improve financial clarity year-round.