Making Tax Digital (MTD) for Income Tax: What You Need to Know Now
At Friendly Assist Accountancy, we’re keen to make you fully aware of Making Tax Digital for Income Tax (more usually called MTD ITSA).
This is an important shift in the manner sole traders, landlords, and other self-assessment taxpayers must record and report their income to HMRC.
The key points as of September 2025 follow, including what’s new, what you’ll need to prepare and what the deadlines are.
What is MTD for Income Tax?
MTD for Income Tax is when, as a landlord or sole trader (or both), and if your self-employment and/or property income exceeds a specific threshold,
you will be required to:
- Hold digital records of income and expenses via MTD-adapter software.
- Submit quarterly summaries (reports) of property / self-employment income & expenditure to HMRC.
- Make a final declaration at the end of the tax year to ensure everything is in order.
It replaces part of the Self Assessment system for qualifying taxpayers. Instead of a single annual return (and possibly earlier estimates), there will be multiple reports during the year plus the year-end final declaration.
Who it Applies To / Phases & Thresholds.
MTD is being introduced in stages.
The thresholds apply to gross trading and property income — not profit. Additionally, multiple sources of qualifying income (e.g. trade + property, including foreign property) are combined to calculate if you are over the thresholds.
The below are the thresholds and when you must comply:
| Threshold for gross income from self-employment/property | When you must comply from | Notes |
|---|---|---|
| £50,000+ | 6 April 2026 | If your gross income in tax year 2024/25 is over £50,000, HMRC will assess and write to you. (ICAEW) |
| £30,000+ | 6 April 2027 | Applies for those whose income in 2025/26 exceeds £30,000. (Saffery) |
| £20,000+ | 6 April 2028 | For those whose gross income in 2026/27 exceeds £20,000. The government has legislated for this lower threshold. (Saffery) |
Key Deadlines & Filing Calendar
So that you can better plan ahead, following are the upcoming deadlines (for first few years) and what to expect each quarter/year:
6 April 2026 — First day of first year that people with over £50,000 gross income are in MTD for Income Tax.
7 August 2026 — First quarterly update (Q1) between 6 April and 5 July 2026 is due.
Quarterly updates will subsequently be published for each quarter. Dates (approx) will be: early Nov 2026 (Q2), early Feb 2027 (Q3), early May 2027 (Q4) for the April-2026-to-April-2027 year.
31 January at the end of each tax year (as now) will remain the date for final declaration / final Self Assessment‐type confirmation. For example, for the 2026/27 tax year, final return / final declaration is due 31 Jan 2028.
New / Recent Developments & Challenges
In the Spring Statement 2025, the government reconfirmed the intention to lower the threshold to £20,000 from April 2028.
Draft legislation (published July 2025) establishes that reduction and provides clearer guidance on rules like exemptions, penalty operation, etc.
There is an exemption from digital exclusion: for those who, due to age, disability, location or other reason, are not reasonably able to keep digital records or file digitally. You may need to apply for this. – We can assist and advice you here.
HMRC will be writing to many of them affected from earlier Self Assessment returns. For example, individuals whose 2024/25 return shows gross income of more than £50,000 will receive a letter (Feb 2026) to inform them that they will have to comply from April 2026.
Low Incomes Tax Reform Group
Things to Watch Out For / How to Prepare
Check your gross income from all relevant sources (trade + property) for the relevant previous year(s) so you know when you’ll be in breach of the limit.
Choose & install software that is MTD-ready. Even with the use of spreadsheets, these must integrate (or have a “bridging” product) and connect to software that is able to deliver digital summaries to HMRC.
Start making records online now, even if you are not currently under duty. That gives you time to iron out issues.
Understand what is regarded as qualifying income. For example, gross rent income (pre-expenses) counts, foreign property income counts, and various sources of trade / property are grouped for threshold purposes.
Monitor HMRC and your software firm for instruction as the new regulations arrive. Some of the specifics (such as just how quarterly summaries are filed, deadlines, fines) may be adjusted.
Budget to have your opportunity to be caught, and allow time (and perhaps training) to get compliant.
Recent Deadlines & Sample Schedule
Here’s a clearer schedule of what’s to come:
| Date | What’s Due / What’s a Key Event |
|---|---|
| 31 Jan 2026 | Last date to file your 2024/25 Self Assessment return (online) under the old rules. |
| Feb 2026 | HMRC sends letters to those with 2024/25 gross income > £50,000 to inform them they must comply from 6 April 2026. (Low Incomes Tax Reform Group) |
| 6 April 2026 | Phase 1 starts: anyone with >£50,000 from self-employment/property must be under MTD. |
| 7 Aug 2026 | First quarterly update (Q1) for Phase 1 taxpayers (for period 6 Apr – 5 Jul 2026). |
| 6 April 2027 | Phase 2 starts: threshold lowered to >£30,000 gross income. |
| 6 April 2028 | Phase 3: threshold lowered further to >£20,000 gross income. |
What This Means for You — If You’re a Sole Trader or Landlord
If your total gross income (property and self-assessment) is already more than £50,000, you will be fully compliant from 6 April 2026. You would have already had this in place (software, records, habits).
If your income is slightly lower, but projected to exceed £30,000 in 2025/26, then your starting point is April 2027.
If you’re in the region of £20,000, you still have until April 2028, but planning in advance will minimize stress.
Even before you’re required, maintaining good digital record-keeping, keeping up-to-date, and clean book-keeping will make the shifts much easier, less risk of mistakes or fines.
What to Watch Out For / Risks
Penalties: If you miss deadlines (quarterly updates or final declaration), HMRC may impose late filing / late update penalties. Rules and penalty arrangements are in the draft legislation.
Software Costs and Learning Curve: Some software costs a lot of money, or are on-going subscriptions. Also, you (or your accountant) may have to acclimatise.
Errors: If quarterly reporting, more frequent reporting, errors mount up if data entry is neglected or entries are in arrears.
How Friendly Assist Accountancy Can help – we get you on board
Friendly Assist Accountancy can help with MTD for Income Tax in entirety:
We help you calculate if you will be in scope, from your 2024/25 and 2025/26 forecasted income.
We help in selecting & installing MTD-compatible software, or bridging tools if necessary.
We structure your bookkeeping / record-keeping so that quarterly updates become simple.
We can take responsibility for quarterly updates & the ultimate declaration so that you can spend less time worrying about it (business, property, etc.).
Your first consultation is free — let’s go over where you’re at and get you well set up before deadlines.