What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is usually shortened to MTD for Income Tax. You may also see it called MTD for ITSA, which stands for Making Tax Digital for Income Tax Self Assessment. We know — not the catchiest name. But what it actually means is pretty simple: you'll send HMRC a quick update on your income and expenses four times a year, then wrap everything up with one tax return after the end of the year, sent through your software.
It's HMRC's way of bringing tax into the modern age. And with the right software, it's honestly less painful than it sounds.
Does this affect me?
If you're self-employed, a sole trader, or a landlord — yes, once your income is over the threshold. The change started on 6 April 2026 and is rolling out in stages based on your yearly income:
- 6 April 2026 — if your income was over £50,000 in the 2024 to 2025 tax year (this stage has started)
- 6 April 2027 — if your income was over £30,000 in the 2025 to 2026 tax year
- 6 April 2028 — if your income is over £20,000 in the 2026 to 2027 tax year
⚠️ These dates have shifted before — worth double-checking HMRC's guidance on GOV.UK to make sure you're working from the latest schedule.
How do I work out my income for this?
HMRC looks at your gross income from self-employment and property combined — that's your total before expenses come off. So if you earn £40,000 freelancing and £15,000 from renting out a property, that's £55,000 qualifying income.
⚠️ If you've got more complex income — like income from a partnership — check HMRC's current guidance on how that's treated.
What do I actually have to do differently?
Outside MTD, you file one Self Assessment return a year and that's it. Under MTD for Income Tax, you'll also send four shorter updates throughout the year — one per quarter — then your tax return to close everything off.
The quarterly updates aren't a full tax return. Think of them more like keeping HMRC in the loop as you go. You're just summarising what came in and what went out.
So I don't have to do a Self Assessment return anymore?
You still do. There is one tax return a year, due by 31 January after the end of the tax year, and it covers all your income. The quarterly updates don't take its place. Income from outside MTD, such as wages, savings interest or dividends, goes on that same return, so you don't file a separate one for it. The difference is that you complete and send the return through software that works with MTD for Income Tax. For the tax year before you join, you file your Self Assessment return as usual.
⚠️ Check with HMRC or your accountant if you have multiple income streams to make sure you know exactly what applies to you.
Do I need special software?
Yes — HMRC requires you to use compatible software to send your updates. A plain spreadsheet won't do it on its own. But if you're already working in Excel or a similar format, bridging software (like Tax Optimiser) can connect what you've already got to HMRC's systems. No need to start from scratch.
What happens if I miss a deadline?
HMRC is bringing in a points-based penalty system. Miss a deadline, get a point. Rack up enough points, and a financial penalty kicks in. It works a bit like driving licence points — they add up. There is one exception: for the 2026 to 2027 tax year, HMRC is not giving penalty points for late quarterly updates. A late tax return still earns a point, and you have to send your quarterly updates before you can submit the return.
⚠️ The details of how the penalty system works in practice are worth verifying with HMRC, as they're subject to change.
When do I need to start getting ready?
If your income was over £50,000 in the 2024 to 2025 tax year, you should have started on 6 April 2026, and you can still sign up if you haven't. If your start date is still ahead, the best thing you can do right now is make sure you're keeping digital records of your income and expenses — and find software you actually feel comfortable using before the deadline creeps up.
Getting set up early means the quarterly updates will feel like a quick admin task rather than a mad scramble four times a year.
Is anyone exempt?
Some people won't need to follow MTD for Income Tax — for example, those with very low income, or people who can show that digital record-keeping genuinely isn't a practical option for them.
⚠️ The exemptions list has changed during the MTD rollout, so always check the current HMRC guidance to see if any apply to you.
