The Complete MTD for Income Tax Guide (2026)
Everything sole traders and landlords need to know about Making Tax Digital for Income Tax — in plain English.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is an HMRC initiative requiring sole traders and landlords to keep digital records and submit quarterly summaries of their income and expenses — rather than filing one annual Self Assessment return.
The goal is to give HMRC more up-to-date information about taxpayers' income, reduce errors from end-of-year estimates, and give taxpayers a more accurate picture of their tax position throughout the year.
The first phase launched on 6 April 2026 for those with qualifying income over £50,000. It rolls out to lower income levels in 2027 and 2028.
Who is affected?
MTD applies to sole traders and landlords whose qualifying income (gross self-employment income + gross UK property income combined) exceeds the threshold. PAYE employment income does not count.
| Phase | Start date | Qualifying income threshold |
|---|---|---|
| Phase 1 | 6 April 2026 | Over £50,000 |
| Phase 2 | 6 April 2027 | Over £30,000 |
| Phase 3 | 6 April 2028 | Over £20,000 |
Key dates and deadlines
What software do you need?
You must use HMRC-approved MTD-compatible software. There are free and paid options:
See the full free MTD software guide for more detail.
What you need to do
- 1Check your qualifying income from your 2024/25 Self Assessment return.
- 2Register for MTD via your Government Gateway account.
- 3Choose and set up HMRC-approved MTD software.
- 4Connect the software to your HMRC account.
- 5Start keeping digital records from 6 April 2026.
- 6Submit your first quarterly update by 5 August 2026.
See the full MTD checklist for 2026.
Go deeper
Detailed guides on every aspect of MTD for Income Tax:
Frequently asked questions
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax (MTD ITSA) is an HMRC requirement for sole traders and landlords to keep digital records and submit quarterly income and expenses summaries to HMRC, instead of one annual Self Assessment return. It began on 6 April 2026 for those with qualifying income over £50,000.
Who has to use MTD for Income Tax from April 2026?
Sole traders and landlords whose combined qualifying income (gross self-employment income plus gross UK property income) exceeded £50,000 in the 2024/25 tax year. PAYE employment income does not count towards the threshold.
What are the quarterly submission deadlines?
There are four each year: 5 August (Q1), 5 November (Q2), 5 February (Q3), and 5 May (Q4). Each submission covers the three months ending on 5 July, 5 October, 5 January, and 5 April respectively.
Does MTD replace Self Assessment?
Partially. Quarterly updates replace the quarterly element, but an annual 'final declaration' (previously called the Self Assessment tax return) still happens every January. The payment deadline of 31 January is unchanged.
What software do I need for MTD?
You need HMRC-approved MTD-compatible software. Free options include HMRC's own Basic Tools and FreeAgent (free with a Mettle business account). Paid options include QuickBooks, Xero, FreeAgent standalone, and Sage.
What is a quarterly update — is it a full tax return?
No. A quarterly update is just a summary of your income and expenses for that quarter — category totals, not individual receipts. No tax is calculated or paid at this point. Your software generates and submits it from your records.
What happens if I miss a quarterly deadline?
In 2026/27 (the first year), HMRC has confirmed a grace period for people clearly trying to comply. From 2027/28, a penalty points system applies: each missed submission earns a point, and 4 points in a rolling 12-month period triggers a £200 penalty.
Who is exempt from MTD for Income Tax?
People with qualifying income permanently below the relevant threshold, those with a genuine digital exclusion (disability, no internet access etc. — you must apply to HMRC), and people whose income is entirely from PAYE, pensions, savings or dividends are not in scope. Limited companies are also not in scope.
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