Making Tax Digital explained: who it affects and when
Making Tax Digital (MTD) is HMRC's move to digital record-keeping and more frequent online reporting. It already covers VAT; the big change now is MTD for Income Tax, which starts phasing in for the self-employed and landlords from April 2026. Here is what it means and whether it affects you.
MTD for VAT (already in force)
If your business is VAT-registered, you are already under MTD: VAT records must be kept digitally and returns filed through compatible software. This has applied to all VAT-registered businesses since April 2022, so for most it is business as usual - see ourVAT return cost guide for what the compliance work costs.
MTD for Income Tax (from April 2026)
This is the phase that brings a lot of sole traders and landlords into digital reporting for the first time. It replaces the single annual Self Assessment with quarterly digital updates plus a year-end declaration. The rollout is staged by income:
- April 2026: qualifying income over GBP 50,000.
- April 2027: qualifying income over GBP 30,000.
- April 2028 (planned): qualifying income over GBP 20,000.
"Qualifying income" means your gross self-employment and property income before expenses. Below the current thresholds you stay on ordinary Self Assessment for now.
What you will need to do
- Keep digital records of income and expenses in compatible software.
- Send HMRC a quarterly update from that software.
- Submit a final declaration after the tax year to confirm the figures and any other income.
What about limited companies?
MTD for Corporation Tax has been signalled but is not here yet, and no firm start date has been set. Companies should keep an eye on it but are not affected by the April 2026 Income Tax phase.
How to prepare
If you are over the threshold, the practical steps are the same: move your record-keeping into HMRC-recognised software now rather than at the deadline, and get comfortable reporting quarterly. An accountant can set up the software, handle the quarterly submissions, and confirm which phase and threshold apply to you - which is where most people choose to hand it over.
Find an accountant set up for Making Tax Digital →
Frequently asked questions
Who does Making Tax Digital for Income Tax affect?
Self-employed people and landlords, phased in by income. From April 2026 it applies to those with qualifying income over GBP 50,000; from April 2027 the threshold drops to GBP 30,000, and a further extension to GBP 20,000 is planned for April 2028. Below those levels you are not yet in scope.
What do I actually have to do under MTD for Income Tax?
Keep digital records of your business or property income and expenses, send HMRC a quarterly update from compatible software, and submit a final declaration after the tax year to confirm the figures and any other income. It replaces the single annual Self Assessment with more frequent digital reporting.
Does MTD apply to my limited company?
Not yet for Corporation Tax. MTD currently covers VAT (already mandatory for VAT-registered businesses) and, from April 2026, Income Tax for the self-employed and landlords. MTD for Corporation Tax has been signalled but not before 2026 and no firm date is set.
What software do I need for Making Tax Digital?
HMRC-recognised compatible software such as Xero, QuickBooks, FreeAgent or a bridging tool. Spreadsheets alone are not enough for the digital submission, though bridging software can connect a spreadsheet to HMRC. Most accountants file on your behalf through their own software.