Ahead of its 6 April 2026 start date, Helen Wood of TaxAssist Accountants explains what Making Tax Digital for Income Tax is, who needs to join, and what you need to do to be compliant.

What is Making Tax Digital for Income Tax?

HMRC has developed Making Tax Digital (MTD) to modernise the tax system and bring taxpayer submissions into the 21^st century. The first tax to be moved to MTD was Value Added Tax (VAT), which has been mandatory for all VAT-registered businesses since 1 April 2022.

MTD for Income Tax is the next tax to be migrated to the new system. It is a new way to record business income and expenses using MTD-compliant commercial software. MTD for Income Tax also means submissions to HMRC are all through the software and not via HMRC’s online portal or by post.

It involves:

• keeping all bookkeeping and accounting records on software - no more physical paper ledgers or random collection of spreadsheets
• sending quarterly updates to HMRC
• submitting your annual tax return from your software (and not from HMRC online)

Who needs to join MTD for Income Tax?

HMRC has organised MTD for income tax so that businesses will be required to join in phases over several years. The first taxpayers must join from the 6 April 2026.

Only self-employed sole traders and landlords with property income are currently required to join MTD for income tax. If you are self-employed or have rental income, then the precise date that you must move from self-assessment to MTD for income tax is determined by your level of qualifying income.

In 2025, HMRC announced that limited companies will not be required to join MTD as it has no current plans to introduce MTD for corporation tax.

HMRC does intend to require partnerships to join MTD in the future but has not set out details of the expected timeframe for this yet.

What are the relevant dates to join MTD for Income Tax?

The dates you could be required to join MTD for income tax are 6 April 2026, 6 April 2027 and 6 April 2028. More dates may be announced in future by HMRC for taxpayers who do not meet the current qualifying income levels announced.

The date by which you need to join MTD for Income Tax depends on the level of qualifying income you have. Qualifying income is measured using your submitted self-assessment tax return for the tax year prior to the required start date.

If you are self-employed and/or have rental income above £50,000, you will need to start MTD for Income Tax on 6 April 2026.

The rest of the dates and thresholds announced so far are:

Tax year used for threshold calculation	Qualifying income threshold	When you must join MTD for Income Tax
2024/25	£50,000 or more	6th April 2026
2025/26	£30,000 or more	6th April 2027
2026/27	£20,000 or more	6th April 2028

How do I calculate ‘qualifying income’?

Qualifying income for MTD for Income Tax is income from self-employment and property income. No other types of income should be included in this calculation.

Qualifying income is gross income and not profits, so you do not deduct any reliefs, allowances or expenses when calculating it.

Example

In 2024/25, Harry’s tax return shows he has:

• employment income of £60,000
• trading income from his business of £10,000
• rental income from a flat he rents out of £8,000

He will not need to join MTD for Income Tax on 6 April 2026 as his qualifying income (self-employment and property income) is only £18,000.

His employment income is subject to PAYE and so is ignored for the purposes of calculating qualifying income.

In 2025/26, Harry leaves his job and takes his business full time. His tax return shows:

• employment income £15,000
• trading income £50,000
• rental income £8,500

He will need to join MTD for Income Tax on 6 April 2027 as his qualifying income is now £58,500 and this is over the £30,000 threshold for 2027.

What do I need to do to be compliant?

Under MTD for Income Tax you need to:

• select an MTD-compliant software solution to use for your bookkeeping and HMRC submissions
• make quarterly updates to HMRC of your business’ income and expenses by each deadline
• submit your end of year tax return via your software

You should aim to have your software solution in place by the date you must join MTD for Income Tax.

The quarterly updates and tax return deadlines are as follows:

Quarter	Date
Quarterly update 1	7 August
Quarterly update 2	7 November
Quarterly update 3	7 February
Quarterly update 4	7 May
End of year tax return	31 January

What is the new penalty regime?

Late filing

Under MTD for Income Tax, the old £100 automatic fines for a tax return being one day late (with further automatic fines at set intervals) have been replaced by a points-based system. Once you receive four points, you will face a £200 penalty.

You will receive one point for each quarterly update or tax return that is filed late.

Points will be removed from your record (like points on a driving licence) if:

• you file all submissions on time for 12 months, and
• all submissions due for the last 24 months have been received by HMRC.

For the first year of MTD for Income Tax only, late filing points for quarterly updates will not be awarded while both taxpayers and HMRC get used to the systems and processes.

Late payment of tax

For the late payment of tax under MTD for Income Tax, penalties will kick in sooner than previously. The penalties below are cumulative.

How late?	Penalty
15 days	3% of tax due
30 days	+ 3% of tax due
31 days+	+ 10% per year

For the first year of MTD for Income Tax only, late payment penalties will not be awarded until the tax is 30 days late, so the 15-day late penalty will be ignored.

What should I do next?

If you think you may be required to join Making Tax Digital for Income Tax and don’t know where to start, speak to your accountant as soon as possible. They will be able to assess if and when you will need to register for Making Tax Digital and advise on software solutions.

Further information can be found on HMRC’s Making Tax Digital hub.

About the author

Helen Wood is a qualified chartered accountant (CA) and joined TaxAssist Accountants as Technical Content Writer in 2025 following three years as a freelance content writer for clients in the tax and accounting publishing sector. Prior to this, she spent 17 years at Big Four and Top 10 accountancy firms. Helen writes clear and helpful articles on tax and accounting for businesses and individuals.

See also

What you need to know about the Employment Rights Bill

What you need to know about Employment Allowance

Find out more

Making Tax Digital (GOV.UK)

Images

Getty Images

Publication date

18 March 2026

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.