Summary of Making Tax Digital (MTD) for Income Tax. 

​

• From April 2026, MTD for Income Tax will start to become mandatory for self-employed businesses and landlords.

• Under MTD for Income Tax, the Self Assessment tax return will be replaced by five new reporting obligations made during and after the tax year. There will be quarterly updates required and a year-end final declaration.

• Non-UK resident or domiciled individuals will have to follow MTD where they have UK self-employment and/or UK property and meet the turnover threshold.

• UK residents will have to follow MTD if they have foreign property income that meets the threshold (may be combined with other self-employment or UK property turnovers). 

• Digital records of all transactions will be needed. These will form the basis of the quarterly updates, which must include the information set out in HMRC's update notice.

• If you are not already using software for your record-keeping/accounting, you will need to learn how to use a spreadsheet or some type of accounting software or App which is MTD compliant.

• You will need a reliable internet connection and a facility to store your electronic data.

 

MTD for Income Tax reporting requirements 

​

• Quarterly updates must be submitted to HMRC, with everyone adhering to the following quarter dates:

 

Quarter  Tax quarterly period Calendar quarterly period Filing deadline

​

6 April - 5 July (tax quarter) 1 April - 30 June (calendar quarter) 7 August (filing deadline)

6 July - 5 October (tax quarter) 1 July - 30 September (calendar quarter) 7 November (filing deadline)

6 October - 5 January (tax quarter) 1 October - 31 December (calendar quarter) 7 February (filing deadline)

6 January - 5 April (tax quarter) 1 January - 31 March (calendar quarter) 7 May (filing deadline)

​

• An election (a calendar quarter election) can be made to change to calendar quarters, which will stay in place until withdrawn. The filing deadlines will remain the same.

• A year end final declaration statement must be then made for the relevant period to finalise your income tax position. The information provided will then be used to generate your Self-Assessment tax bill for that tax year. This must be filed by 31 January following the relevant tax year unless later under s8 or s8A TMA 1970.

 

Tax payments

​

• There are currently no changes to the way that tax liabilities are paid. The tax liability will need to be paid by 31 January of the next year (as is currently the case).

 

Penalties

​

• The current legislation is as follows:  

  • From April 2026, for taxpayers with business or property income over £50,000 per year (who are required to submit digital quarterly updates through MTD for Income Tax). 

  • From April 2027, for those with business or property income over £30,000. 

• These new penalty regimes use a point-based system for late submission and the late payment of tax liabilities.

• Penalties already apply for errors in returns or documents and for late payment interest.

• There will be no late submission penalties for missing quarterly updates during the testing phase of MTD for Income Tax.

 

Exemptions 

​

The digitally excluded exemption 

• If you are reading this guide you are probably online and this might not apply.

• The digitally excluded are exempted from MTD if they have notified HMRC (to opt-out) and either: 

  • The person is a practising member of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records. 

  • For any reason (including age, disability or location) it is not reasonably practicable for the person or partner to use electronic communications or to keep electronic records.

• To be exempt the individual must apply for the exemption when the application process opens. 

 

Income exemption 

​

• MTD for Income Tax will not currently apply where gross income (turnover) is less than £30,000. The government is consulting as to when and if smaller businesses will join. 

• It was announced at Autumn Budget 2024 that self-employed businesses and landlords with a turnover above £20,000 will be mandated into MTD ITSA within the term of the current parliament.

 

Qualifying care exemption 

​

• MTD for Income Tax will not apply to a person in respect of that person's provision for qualifying care.

• Qualifying care includes foster care and shared lives care.

• Qualifying care receipts do not count towards your qualifying income. 

 

No National Insurance Number exemption

​

• An individual will be exempt from MTD for Income Tax if on 31 January before the start of the tax year, that person does not have a National Insurance Number. 

 

When you need to apply for an exemption 

If you are not automatically exempt, you can apply for an exemption, if you can show that it’s not reasonable or practical for you to use computers or the internet.