Making Tax Digital for Income Tax: A Guide for the Self-Employed and Landlords

From April 2026, Making Tax Digital for Income Tax (MTD for IT) will become mandatory for many self-employed individuals and landlords. This represents one of the biggest changes to the UK tax system in recent years, moving away from a single annual tax return towards more regular digital reporting to HM Revenue & Customs.

The aim of MTD for IT is to modernise the tax system, improve accuracy, and give taxpayers greater visibility over their tax position throughout the year.

Who will need to comply?

MTD for IT will be introduced in phases:

• From 6 April 2026 Individuals with qualifying income over £50,000 per year from self-employment and/or property.

• From 6 April 2027 Individuals with qualifying income between £30,000 and £50,000.

Alongside this, a new points-based penalty system will apply for late submissions and late payment of tax under MTD for IT.

What is qualifying income?

Qualifying income is a key concept under MTD for IT. It is broadly the total income earned in a tax year from self-employment and property, including:

• Income from more than one self-employed trade

• Income from multiple rental properties

The following income does not count towards the MTD threshold:

• Employment income taxed under PAYE

• Dividends

• Pension income

• Partnership income

What will change under MTD for IT?

If you are within scope, you will need to:

Keep digital records

You must maintain digital records of income and expenses using software that is compatible with MTD for IT.

Submit quarterly updates

Instead of reporting everything once a year, you will submit quarterly updates to HMRC summarising your business or property income and expenses. These updates:

• Are not tax returns

• Do not create a tax bill

• Are designed to give HMRC a clearer picture of income throughout the year

Submit a final declaration

After the end of the tax year, you will still be required to submit a final declaration to confirm your figures and make any necessary adjustments. Any tax due will normally remain payable by 31 January following the end of the tax year.

Penalties under the new system

MTD for IT introduces a points-based penalty regime for late filing, similar to the system already used for VAT. Penalty points will build up for missed deadlines, with financial penalties applied once a threshold is reached. Late payment interest and penalties will also apply where tax is paid late.

Preparing for MTD for IT

MTD for IT is a significant change, particularly for those who are used to dealing with their tax affairs just once a year. Early preparation is key. This includes:

• Understanding whether you fall within scope

• Choosing suitable MTD-compatible software

• Adapting record-keeping processes

• Getting comfortable with quarterly reporting

  
  

How we can help

If you are unsure how MTD for IT will affect you, or would like support preparing for the change, we can help you assess your position, select appropriate software, and ensure you are ready well before the new rules take effect.

Please get in touch to discuss how we can support you with Making Tax Digital for Income Tax.