Making Tax Digital (MTD) for Income Tax is now live, having come into force from 6 April 2026. This marks a significant shift in how self-employed individuals and those with income from property report their income to HMRC, and it is already impacting a substantial number of taxpayers.
The new regime currently applies to those with combined business and/or property income exceeding £50,000 per annum (based on total takings, not net profit). HMRC estimates that around 860,000 individuals have been brought into MTD from April 2026.
When MTD Applies
When you are required to start using MTD depends on your qualifying income in a tax year. The phased introduction is as follows:
- If your qualifying income was over £50,000 in the 2024/25 tax year, you must comply from 6 April 2026
- If your qualifying income is over £30,000 in the 2025/26 tax year, you must comply from 6 April 2027
- If your qualifying income is over £20,000 in the 2026/27 tax year, you must comply from 6 April 2028
HMRC have said that partnerships will also be brought into MTD for Income Tax in due course, although we are yet have any firm details of when.
What MTD Means in Practice
Under MTD for Income Tax, affected taxpayers are now required to:
- Maintain digital accounting records
- Submit quarterly updates to HMRC
- Complete an end-of-year finalisation process
The first quarterly update, covering the period from 6 April to 5 July 2026, is due by 7 August 2026.
To comply, taxpayers must use compatible digital software. Common platforms include QuickBooks Online, Xero, Sage, Landlord Studio and Hammock, although the most appropriate choice will depend on the complexity and nature of the business or property portfolio. You can also file using Excel spreadsheets via bridging software, although we recommend specialised software where possible.
HMRC Communication
In the lead-up to implementation, HMRC issued letters to taxpayers confirming that they are mandated into the regime. In some cases, these letters were received only shortly before the start date, which understandably caused some concern.
If you have received such a letter and were previously unaware of your inclusion, there is no need for alarm. While MTD is now in force, there remains a window to get systems in place before the first reporting deadline.
Importantly, HMRC has confirmed that no penalties will be charged simply for failing to sign up by 6 April 2026. However, delaying the transition increases the administrative burden, particularly when trying to reconstruct digital records retrospectively.
Transitional Overlap with Self Assessment
One of the more complex aspects of this transition is the overlap with the existing Self Assessment regime.
Even though MTD reporting has begun for the 2026/27 tax year, taxpayers must still:
- File a traditional Self Assessment tax return for 2025/26
- Meet the filing deadline of 31 January 2027
This means that during the 2026/27 tax year, individuals will effectively be managing both quarterly MTD submissions and a final Self Assessment return for the prior year.
Taking Action Now
If you are within the scope of MTD, the immediate priority should be to:
- Choose appropriate MTD-compatible software
- Begin maintaining fully digital records
- Register with HMRC for MTD
- Ensure records from April 2026 onwards are accurate and up to date
As long as your digital records for the first quarter are complete by the time of submission, meeting the 7 August deadline should be straightforward.
Final Thoughts
While HMRC has emphasised the long-term benefits of spreading compliance activity across the year, the short-term reality is that this represents a meaningful change in process and discipline.
For more information on Making Tax Digital, we have a series of videos on YouTube that go into greater detail here.
Leaving preparation too late is likely to create avoidable complications. A proactive approach now will make ongoing compliance significantly more manageable. If you have not yet started preparing for MTD or are unsure how it applies to your circumstances, please get in touch, we’d be happy to advise and work with you.
April 28th, 2026
