One month until Making Tax Digital for Income Tax launches
From 6 April 2026, sole traders and landlords with an income over £50,000 are required to use Making Tax Digital (MTD) for Income Tax. Anyone caught by these new rules must have signed up to the new system in advance, using compliant software. HMRC will have contacted individuals whose previous returns indicate they meet the threshold, but anyone newly exceeding the threshold this tax year must also ensure they are compliant.
Qualifying income is calculated by “gross income before expenses from self‑employment and/or property, not including other income like PAYE or dividends”.
Under the new regime, users must submit quarterly updates to HMRC within one month of the end of each period (Quarterly Business Updates or QBUs). The first update will be due by 7 August 2026, covering the period 6 April to 5 July 2026. Unlike VAT returns, each QBU reports cumulative income and expenses for the tax year to date.
Once all four have been filed, there is a final declaration to submit to HMRC, which will replace the current annual Self Assessment for those caught by the new rules. Like Self Assessment it will be due by 31 January after the tax year ends.
Those caught by the new rules will need to ensure that they are signed up to a compatible software provider or solution in advance of 6 April 2026 - the full list of compliant software is here and keep digital records using HMRC approved software. Most full-service compliant products are paid-for solutions.
There will be a penalty-based system for non-compliance, although HMRC plans to phase in fines, but penalty points will still accrue during the first year.
MTD began the first phase of rollout back in 2019, with all VAT‑registered businesses required to use MTD for VAT from 2022. The 2026 implementation of the Income Tax threshold will be followed by further threshold drops in 2027 and 2028, with anyone self-employed or a landlord earning up to £30,000 from 6 April 2027. It is planned to drop to £20,000 from 6 April 2028.
There will be some exemptions in circumstances where digital compliance is not possible, including for religious reasons, but any exemption must be approved by HMRC before the relevant deadline.
Posted on 02/24/2026 by Ortolan
