On 6 April 2026, a significant shift in personal tax reporting will take effect with the introduction of Making Tax Digital – Self-Assessment Income Tax (MTD). MTD for income tax becomes mandatory for self-employed individuals and landlords with income over £50,000.
The new rules will require nearly one million taxpayers to keep digital records and file five separate digital reports each year, using HMRC compatible software.
The Government describes MTD as a modernisation initiative. HMRC insists it will provide frequent access to income and expense data, reduce the tax gap, improve accuracy, and support compliance.
These will not produce real-time tax calculations or require early payment. The timings and deadlines for the payment of Self-Assessment Income Tax all remain unchanged with this new change, which is confined solely to reporting obligations from taxpayers subject to the scheme.
MTD is one of the most significant changes to the Self- Assessment income tax system since Self- Assessment it was first introduced in 1996/97. As part of our wider activity educating and support on this subject, across our social media platforms, we are providing 20 of the most common questions we have been asked about MTD, along with the answers in small bite sizes over the coming weeks.
It is a system requiring individuals with qualifying self-employment or property income to keep digital records, submit quarterly updates, and file a final end-of-year submission through software. It replaces the traditional annual online Self-Assessment filing process for those within scope. Once mandated, reporting must be completed through compatible software rather than HMRC’s existing Self-Assessment portal. The system introduces more frequent reporting during the tax year while retaining the requirement to confirm the final tax position at year end.
Making Tax Digital for Income Tax starts on 06/04/2026 for those within the first phase. There are two further phases based on qualifying income. On 06/04/2027 for the second phase and 06/04/2028 for the third phase, subject to current legislative plans.
Combined gross income (before expenses) from self-employment and property, including overseas property. If your qualifying income is:
The test is based on gross qualifying income before expenses.
Sole traders and landlords (and those with both), where the qualifying income threshold is met.
This includes individuals carrying on a trade, profession or property business in their own name. If you operate more than one trade or have both rental and trading income, all relevant gross income must be considered when determining inclusion.
Many company directors assume that MTD will not apply to them, however, they may be mistaken, because personal side income such as property rental or consulting income is included in the income source HMRC will use in the threshold calculation. So, if you are a director who has income from rented properties and consultancy fees, and the combined income exceeds £50,000, as in the example here:
£27,000 consulting fees
£24,000 property income
You will come within MTD and quarterly digital reporting applies.
Limited companies are not in MTD for Income Tax. Partnerships are not required to use MTD for Income Tax yet, with HMRC indicating a timeline will follow. Company directors operating through limited companies continue under Corporation Tax and existing company reporting rules. General partnerships and LLPs remain outside the current scope, but this position may change in future phases.
Stay tuned for the next set of Q&As on MTD.
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