Making Tax Digital for Income Tax is changing how many sole traders and landlords keep records and report information to HMRC.
Instead of waiting until the end of the tax year to organise everything, people covered by the rules must maintain digital records and use compatible software throughout the year.
The first stage began on 6 April 2026. If the rules apply to you and you have not yet signed up, it is important to review your position as soon as possible.
Making Tax Digital for Income Tax requires certain sole traders and landlords to:
- Keep digital income and expense records
- Use software that works with HMRC
- Submit quarterly updates
- Complete their final tax information after the tax year
- Pay the tax due by the normal deadline
Making Tax Digital for Income Tax, often called MTD for Income Tax, is a digital reporting system introduced by HMRC.
It applies to qualifying income received from self-employment and property. People within the system must use compatible software to record their financial information and send regular updates to HMRC.
MTD does not mean paying Income Tax four times a year. The quarterly updates provide summaries of your income and expenses. Your final tax position is completed later, and the normal tax payment deadlines continue to apply.
The starting date depends on your qualifying income.
You should have started using MTD for Income Tax from 6 April 2026 if your qualifying income for the 2024 to 2025 tax year was over £50,000.
The system will then apply in further stages:
- From 6 April 2027, if qualifying income for 2025 to 2026 was over £30,000
- From 6 April 2028, if qualifying income for 2026 to 2027 was over £20,000
These limits are based on gross qualifying income, not the profit remaining after expenses.
Qualifying income generally includes the total gross income you receive from:
- Self-employment
- UK property
If you have both types of income, they are normally combined when checking the threshold.
For example, suppose you receive £32,000 from self-employment and £21,000 in gross rental income. Your combined qualifying income would be £53,000, even if your taxable profit is much lower after expenses.
Employment income, dividends and pension income are not normally included when checking the MTD qualifying-income threshold.
