What is Making Tax Digital for Income Tax (MTD ITSA)
From 6 April 2026, sole traders and landlords with qualifying income over £50,000 in the tax year 2024-25 must use Making Tax Digital for Income Tax for the 2026-27 tax year. (gov.uk)
Mandatory requirements include:
- keeping digital records of self-employment and property income and expenses using software compatible with HMRC’s recognised platforms (gov.uk)
- submitting quarterly updates summarising income and expenses—not full tax returns (gov.uk)
- continuing to file a full Self Assessment return and paying any tax due by 31 January after the tax year ends (gov.uk)
Key deadlines and transitional reliefs
- First quarterly update deadline: 7 August 2026. If this was missed, send it as soon as possible. (gov.uk)
- No penalties for late quarterly updates during 2026-27, but penalty points will begin in April 2027 for missed quarterly deadlines (one point per missed update; four points triggers a fixed penalty of £200) (gov.uk)
- From September 2026, HMRC will begin to sign up eligible taxpayers who have not yet enrolled themselves (gov.uk)
Who’s in scope and who’s exempt
In scope
- Sole traders or landlords earning more than £50,000 from self-employment or property in 2024-25 and not exempt. (gov.uk)
Exemptions include:
- those who are digitally excluded or whose circumstances make digital record-keeping unreasonable. (gov.uk)
- individuals whose software, hardware or internet access isn’t adequate.
- those falling below the income threshold (less than £50,000 for income from self-employment/property in 2024-25).
What to do if you’ve been signed up by HMRC
If HMRC signs you up (they may do so in stages starting September 2026):
- use recognised software to record your income and expenses and send quarterly updates;
- ensure your digital records are accurate;
- file the full Self Assessment as usual; remember the £200 fixed penalty won’t apply for missed quarterly updates until next year. (gov.uk)
Practical examples
- If a landlord earned £60,000 in 2024-25 from property and submitted their first quarterly update by 7 August 2026, they’re meeting initial requirements—no immediate penalty if slightly late during this transitional year.
- A sole trader earning £70,000 who hasn’t yet signed up: HMRC may sign them up by Sept, so better to voluntarily register now to organise software and records.
Action checklist
- Choose software recognised by HMRC; ensure it's compatible for quarterly submissions.
- Set reminders for the quarterly deadlines.
- Understand the difference between quarterly updates and the annual Self Assessment return.
- Track income thresholds; if your income drops below £50,000, keep in check whether you retain obligations or become exempt.
- Seek advice if in doubt, especially around exemptions or what “qualifying income” includes precisely.
Making Tax Digital for Income Tax marks a major step in UK tax administration. By acting early and staying informed, taxpayers can avoid potential issues and make the new system work to their advantage.