Are you ready for Making Tax Digital for Income Tax?

Are you ready for Making Tax Digital for Income Tax (MTD for IT)? This new way of reporting will become mandatory in phases from April 2026. If you are self-employed or a landlord earning over £50,000, now is the time to prepare for digital record keeping, quarterly updates and the new penalty system that will apply under MTD for IT.

The date from which you must start using MTD for IT depends on your level of qualifying income. If your qualifying income exceeded £50,000 in the 2024–25 tax year, you will need to use MTD for IT from 6 April 2026. If your qualifying income exceeded £30,000 in the 2025–26 tax year, you will need to use MTD for IT from 6 April 2027. Where qualifying income exceeds £20,000 in the 2026–27 tax year, the government has confirmed that MTD for IT will apply from April 2028. Qualifying income is defined as the total income you receive in a tax year from self-employment and property before expenses.

You are currently exempt from MTD for IT if you meet specific conditions that automatically exempt you from the service, such as reasons relating to age, disability, or location, if you have applied for and been granted an exemption by HMRC, or if your qualifying income is £20,000 or less in a tax year.

HMRC’s guidance on MTD for IT has been updated and now includes further information on both permanent and temporary exemptions. It explains which exemptions apply automatically and which require an application. Permanent exemptions are generally automatic and continue to apply unless your circumstances change. You will need to apply for an exemption if you believe you are digitally excluded from using MTD for IT. If you are not required to use MTD for IT, you must continue to report your income and gains through the self-assessment tax return where applicable.