Making Tax Digital (MTD) for Income Tax is the biggest change to how the self-employed and landlords report tax in a generation. If you've only ever filed one Self Assessment a year, here's what's changing and what you actually need to do.
What is Making Tax Digital?
MTD is HMRC's programme to move tax reporting online and make it more frequent. Instead of a single annual Self Assessment, affected taxpayers must keep digital records and send HMRC quarterly updates through compatible software, followed by a final declaration after the tax year ends.
Who does it apply to?
MTD for Income Tax applies to individuals with income from self-employment and/or property above certain thresholds. It's being phased in:
- From April 2026 — qualifying income over £50,000
- From April 2027 — qualifying income over £30,000
- From April 2028 — qualifying income over £20,000
"Qualifying income" is your gross income (turnover before expenses) from self-employment plus property, added together. So a landlord with £30,000 of rent and £25,000 of freelance income is over the £50,000 line and in the first wave. See the thresholds explained in detail →
What actually changes for you?
| Before | Under MTD |
|---|---|
| One annual Self Assessment | Four quarterly updates + a final declaration |
| Paper records or spreadsheets fine | Digital records in compatible software, kept as you go |
| Last-minute January data entry | Records maintained throughout the year |
| One deadline to remember | Five submissions a year, each with a deadline |
The three things you must do
- Keep digital records of your business and property income and expenses using MTD-compatible software (such as QuickBooks).
- Send quarterly updates to HMRC — a summary of income and expenses for each quarter.
- Submit a final declaration after the tax year, confirming your figures and any other income/reliefs. This replaces the old Self Assessment return.
Watch out for penalties. MTD uses a new points-based system. Each late submission earns a point; reach the threshold and you get an automatic penalty. Miss several and the costs add up quickly. See all the deadlines →
How to get ready
The practical steps: confirm whether and when MTD applies to you, get set up on compatible software, make sure your opening figures are clean, and put a system in place to capture records quarterly. Many landlords and sole traders choose to have this done for them rather than learn new software and juggle five deadlines a year.
This guide is general information, not personal tax advice. Your circumstances may differ — check your specific position with a qualified accountant.
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