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Making Tax Digital for Income Tax (MTD IT): Will It Affect You and What You Need To Do
- Caroline
- Apr 16
- 3 min read
From April 2026, HMRC is rolling out Making Tax Digital for Income Tax (MTD IT). If you’re self-employed or a landlord, this might affect you, so here’s a breakdown of what’s changing, who’s affected, and what you need to do.
What is Making Tax Digital?
Making Tax Digital is HMRC’s move to get people to keep digital records and submit tax information more frequently using approved software. It’s already in place for VAT. Now it’s coming for income tax.
HMRC's objective is to "exploit the opportunities offered by digitalisation to make it easier for everyone to get tax right". They also see it as a tool for individuals to stay on top of their tax affairs and business planning to grow their business
When is it happening?
From April 2026 if your total qualifying income is over £50,000 in 2024/25
From April 2027 if your total qualifying income is between £30,000 and £50,000 in 2025/26
The government has announced that if your qualifying income is over £20,000, you’ll need to use MTD IT in the future, but has not confirmed the timeline on this as of the time of writing this.
Who does Making Tax Digital for Income Tax apply to?
If you're self-employed (including sole traders), a landlord (UK or overseas), or both and your combined income from these sources is above the threshold, you’ll need to report under MTD IT.
To check if you're included:
Add up your self-employed income (before expenses)
Add your rental income, UK and overseas (before expenses)
This total is your "qualifying income". If the total is:
Over £50,000, you’ll need to comply from April 2026
Between £30,000 and £50,000, you’ll join from April 2027
Example:
You earn £35,000 from freelance work and £10,000 in rental income.
Your total qualifying income = £45,000 → You’ll be included from April 2027
Important: This is based on gross income from self-employment/rental income only. Other types of income like salary from employment or dividends DO NOT count towards the threshold.
What will I need to do under MTD IT?
Once MTD IT applies to you, you’ll need to:
Create, store and correct digital records of your business income and expenses
Send your quarterly updates to HMRC using MTD IT-compatible software
Submit your annual tax return by 31 January the following year
Where can I check the official HMRC guidance?
💬FAQs
What if I have more than one business or property?
You’ll still add all the income together. MTD IT applies based on your total combined self-employment and property income.
I only just went over the threshold, will I still be included?
Yes. HMRC uses your most recent tax return to assess if you meet the threshold. If your gross income is over £50,000 in your 2024/25 tax return, you’re in from April 2026, and if your gross income is over £30,000 in your 2025/26 tax return, you're in from April 2027
What if my income drops below the threshold later?
Once you’re in MTD, you stay in, even if your income later falls below the threshold, unless HMRC changes the rules.
Do I need to register, or will HMRC tell me when I’m included?
HMRC is expected to contact eligible individuals ahead of time, but I wouldn't rely on this! It’s worth checking your income and preparing in advance so you’re not caught off guard.
What software do I need to use?
You’ll need to use HMRC-approved MTD IT software (there are free and paid options). If you’re already using cloud accounting software, you may just need to check that it’s MTD IT-compatible.
Need Help?
Want help figuring out if this applies to you or getting set up with software that’s MTD IT-compliant? Get in touch! I’m happy to make this whole thing a lot easier for you.
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