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The implementation of Making Tax Digital for Income Tax (MTD for ITSA) has been on the horizon for a number of years, with the intention to ‘create a tax system fit for the digital age’.
And, after the successful roll out of Making Tax Digital for VAT, the next phase of the roll-out for digital reporting of income began as the new tax year arrived on 6 April 2026. In this article Kate Cowell, Associate Tax Adviser, explains who meets the criteria for the changes, why it’s essential to understand if you’re affected and what steps you need to take to comply.
Who does Making Tax Digital affect?
MTD for ITSA applies to all self-employed individuals and landlords with gross ‘Qualifying Income’ above the relevant threshold if:
- you’re an individual registered for Self -Assessment
- you get income from self-employment or property, or both
- your qualifying income is more than £50,000 (reducing to £30,000 and £20,000 in future years – see below)
When to start using Making Tax Digital?
The reporting of your income via Making Tax Digital for Income Tax will become mandatory in phases. It started on 6 April 2026, with the initial phase introducing individuals who have qualifying income of more than £50,000.
Those individuals whose qualifying income is more than £30,000 will follow from 6 April 2027, and for those with a qualifying income of £20,000 from 6 April 2028.
What counts as Qualifying Income for MTD?
Qualifying income is assessed on a combined basis, so if you have any of the following sources of income these will be added together:
- Rental income, before expenses (including jointly let properties)
- Self-Employment (turnover)
- Disguised investment management fees or income based carried interest
- Trust income: If you are a beneficiary of a bare trust or a direct beneficiary (income bypasses the trustees) of an interest in possession trust, that receives property or trading income.
For example, if you’re in receipt of income from a joint property and your half share of the rent received is £12,000, and you also receive gross self-employment income of £40,000 – your Qualifying Income would be £52,000.
| Tax Year assessed | Qualifying income threshold | MTD for ITSA begins | First tax year using MTD for ITSA |
| 2024/25 | £50,000 | By 6 April 2026 | 2026/27 |
| 2025/26 | £30,000 | By 6 April 2027 | 2027/28 |
| 2026/27 | £20,000 | By 6 April 2028 | 2028/29 |
Partnership income is not currently within the scope of MTD for ITSA, but this will be introduced at a later date.
How will my income be reported to HMRC?
With MTD a quarterly update of your income and expenses will need to be digitally submitted to HMRC. Instead of the previous annual only submissions. The quarterly submissions will be on a cumulative basis, with the deadline for each being just over a month after the reporting period. A separate submission will be required for each trade or property business. So, for example if you are self-employed and have rental income, eight submissions will be required each year.
| Quarter | Period covered (Calendar Quarter) | Filing Deadline |
| 1 | 6 April to 5 July or (1 April to 30 June) | 7 August |
| 2 | 6 April to 5 October or (1 April to 30 September) | 7 November |
| 3 | 6 April to 5 January or (1 April to 31 December) | 7 February |
| 4 | 6 April to 5 April or (1 April to 31 March) | 7 May |
At the end of the tax year, after the fourth and final quarterly submission is made, a ‘Digital Tax Return’ will be submitted. The Digital Tax Return is similar to the current Self-Assessment Tax Return and the submission deadline will continue to be the 31 January following the tax year. There are no changes to the tax payment due dates, which will remain at 31 January following the tax year along with payments on account being due in January and July.
What software do I need to comply with MTD?
Everyone has different needs dependent on the complexity and frequency of their income and expenses. But we can advise on a variety of record keeping solutions; for some it may be preparing a simple spreadsheet. For others it might be helping to choose a bespoke platform to support you as self-employed or as a landlord. Your current software may be approved, if you would like to check, please click this link to go through to the HMRC approved software list. Or get in touch with a member of the team if you would like to discuss this further.
What happens if I don’t comply with MTD rules?
Keeping digital records and submitting these using approved software is mandatory under Making Tax Digital (MTD), so you may receive a fine from HMRC if you don’t follow the rules. You can find out more about the Making Tax Digital penalties here.
We’re here to help
For support with all aspects of Making Tax Digital, Kate and our tax teams in Ipswich, Colchester, Norwich and Bury St Edmunds are here to help. Call us on 0330 058 6559 or email us hello@scruttonbland.co.uk.
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