When Does Making Tax Digital Start for Self-Employed in 2026?

The landscape of tax reporting in the UK is undergoing its most significant transformation in decades with the phased implementation of Making Tax Digital (MTD). Designed by HMRC to modernise the tax system, reduce errors, and provide taxpayers with a more real-time view of their tax affairs, MTD for Income Tax Self-Assessment (ITSA) is set to revolutionise how millions of self-employed individuals and landlords manage their tax obligations. Following extensive consultation and a series of deferrals, the mandatory rollout dates have been confirmed, with the first wave of businesses and property owners required to comply from April 2026. This comprehensive guide from AccountsOS delves into the specific start dates, eligibility criteria, digital record-keeping requirements, and the steps you need to take to ensure compliance. Understanding these changes now is crucial for a smooth transition and to avoid potential penalties.

• Initial Start Date: 6 April 2026
• First Threshold: Over £50,000 Income
• Key Requirement: Digital Record Keeping

View HMRC Guidance

What is Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)?

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) represents a fundamental shift in how self-employed individuals, sole traders, and landlords report their income and expenses to HMRC. It is part of the UK government's wider initiative to modernise the tax system, aiming to make tax administration more efficient, reduce common errors, and provide businesses with a clearer, more real-time picture of their tax position throughout the year.

Under the traditional Self-Assessment system, individuals typically submit one annual tax return (the SA100) after the end of the tax year, compiling all their income and expenses. MTD ITSA replaces this single annual submission with a more frequent, digital reporting process. Instead of one large submission, taxpayers will be required to keep digital records and submit summaries of their income and expenses to HMRC four times a year, known as quarterly updates. These updates are then followed by an End-of-Period Statement (EOPS) for each business or property income source, and finally, a single Final Declaration for the entire tax year.

The core principles of MTD ITSA are:

• Digital Record Keeping: Businesses must maintain digital records of their income and expenditure using MTD-compatible software.
• Quarterly Updates: Regular summaries of income and expenses must be submitted to HMRC every three months.
• End-of-Period Statements (EOPS): An annual statement for each business or property income source, allowing for accounting adjustments.
• Final Declaration: A single annual declaration confirming all income from various sources, including non-business income, and claiming any reliefs or allowances.

What about MTD for VAT? Making Tax Digital for VAT was the first phase of MTD and is now mandatory for all VAT-registered businesses, regardless of turnover. If you are already VAT registered, you should be using MTD-compatible software for your VAT returns. MTD ITSA is a separate but related initiative for Income Tax.

Mandatory Start Dates and Income Thresholds

The implementation of MTD ITSA has been phased to allow businesses and software providers time to adapt. The mandatory start dates are determined by a business's or landlord's total qualifying income.

Who is Affected and When?

Income threshold	Mandatory start date	Applies to
Over £50,000	6 April 2026	Self-employed individuals and landlords
Over £30,000	6 April 2027	Self-employed individuals and landlords
General Partnerships	To be confirmed	All general partnerships

Understanding 'Qualifying Income'

The term "qualifying income" is critical for determining your MTD ITSA start date. It refers to your total gross income from all self-employment businesses and UK property rental income. This is the turnover figure before any expenses or allowances are deducted.

• For Self-Employed Individuals: This includes gross receipts from all your sole trade businesses. If you run multiple sole trades, the income from all of them is aggregated.
• For Landlords: This includes gross rental income from all UK property businesses. If you own multiple rental properties, the income from all of them is combined.
• Mixed Income: If you are both self-employed and a landlord, your total qualifying income is the sum of your gross self-employment income and your gross property income.
• Partnerships: General partnerships will be brought into MTD ITSA at a later, unspecified date. The current thresholds apply to individuals.

HMRC will assess your qualifying income based on your last filed Self-Assessment tax return. If your income in the previous tax year exceeded the relevant threshold, you will be mandated into MTD ITSA from the subsequent April.

Example 1: Self-Employed Individual. A graphic designer has gross income of £60,000 for the tax year 2024/25. As this is over £50,000, they will be mandated into MTD ITSA from 6 April 2026.

Example 2: Landlord. A landlord has gross rental income of £40,000 from one property and £15,000 from another for the tax year 2024/25. Their total qualifying income is £55,000. They will be mandated into MTD ITSA from 6 April 2026.

Example 3: Mixed Income. A consultant earns £35,000 from their consulting business and £20,000 from a rental property for the tax year 2024/25. Their total qualifying income is £55,000. They will be mandated into MTD ITSA from 6 April 2026.

What if my income changes?

If your qualifying income falls below the mandatory threshold after you have already started MTD ITSA, you may be able to opt out. However, you must continue to follow MTD rules until HMRC confirms you are no longer required to do so. It is crucial to monitor your income levels and seek advice if you believe you no longer meet the threshold. Conversely, if your income rises above the threshold in a future tax year, you will be mandated into MTD ITSA from the start of the following tax year.

HMRC uses a "look back" period to determine eligibility. Typically, this means they will review your income from the previous tax year. If your qualifying income exceeded the threshold in that period, you will be required to join MTD ITSA from the next mandatory start date. For instance, if your income for the 2024/25 tax year was over £50,000, you are mandated from 6 April 2026. If it was below £50,000 but over £30,000, you would be mandated from 6 April 2027 based on your 2025/26 income.

Key Requirements of MTD ITSA

Complying with MTD ITSA involves more than just knowing your start date. It fundamentally changes how you record and report your financial information. There are three primary requirements: digital record keeping, quarterly updates, and annual finalisation.

1. Digital Record Keeping

The cornerstone of MTD ITSA is the requirement to keep digital records of all your business income and expenses. This means moving away from paper ledgers, manual spreadsheets, or non-digital systems.

• Mandatory Software: You must use MTD-compatible software to record and store your transactions digitally. This software must be capable of interacting with HMRC's systems.
• What to Record: For each transaction, you must record the date, the amount, and the category of income or expense. The specific data points required for digital records include:
  • All business income (sales, revenue)
  • All business expenses (purchases, costs)
  • Date of transaction
  • Type of transaction
  • Amount of transaction
  • VAT details (if VAT registered)
  • Adjustments for accounting purposes
  • Any other relevant business data
• No Manual Entry: While you can use spreadsheets, they must be linked to "bridging software" that can digitally transfer the data to HMRC. Manual re-keying of data is not permitted. The digital link requirement ensures data integrity and reduces errors.
• Maintaining Records: These digital records must be preserved for at least five years after the 31 January submission deadline for the relevant tax year.

2. Quarterly Updates (Income and Expenses)

Instead of one annual report, you will send summaries of your business income and expenses to HMRC four times a year. These are known as "quarterly updates."

• Reporting Periods: Your quarterly periods will typically align with the tax year (e.g., 6 April to 5 July, 6 July to 5 October, 6 October to 5 January, 6 January to 5 April). However, you can choose to align them with your accounting period if it differs, provided HMRC approves this.
• Submission Deadline: Each quarterly update must be submitted to HMRC within one month of the end of the quarter. For a standard tax year (6 April to 5 April), the deadlines are:
  • Quarter 1 (6 April to 5 July): Due by 5 August
  • Quarter 2 (6 July to 5 October): Due by 5 November
  • Quarter 3 (6 October to 5 January): Due by 5 February
  • Quarter 4 (6 January to 5 April): Due by 5 May
• Data Included: Each quarterly update will report the total income and expenses for that period, categorised as required by HMRC. These are cumulative figures, meaning each submission will include the data for the current quarter plus all previous quarters in the tax year.
• No Tax Payment: It is important to note that these quarterly updates are for reporting purposes only. You do not pay tax at this stage. They are designed to give HMRC and you a more up-to-date picture of your tax position.

Example: Quarterly Updates Submission. A self-employed individual's tax year runs from 6 April to 5 April.

• By 5 August, they submit income and expenses for 6 April to 5 July.
• By 5 November, they submit cumulative income and expenses for 6 April to 5 October (including the previous quarter's data and the new quarter's data).
• By 5 February, they submit cumulative income and expenses for 6 April to 5 January.
• By 5 May, they submit cumulative income and expenses for 6 April to 5 April.

3. Annual Finalisation

The annual finalisation process replaces the traditional Self-Assessment tax return. It consists of two parts: the End-of-Period Statement (EOPS) and the Final Declaration.

• End-of-Period Statement (EOPS):
  • Purpose: An EOPS is required for each business or property income source you have. It allows you to make any necessary accounting adjustments that were not included in the quarterly updates. This could include adjustments for accruals, prepayments, stock, capital allowances, private use adjustments, or any other accounting adjustments required to arrive at your final taxable profit or loss.
  • Deadline: The EOPS must be submitted by 31 January following the end of the tax year (e.g., for the tax year ending 5 April 2027, the EOPS is due by 31 January 2028).
  • Scope: The EOPS covers all income and expenses for a specific business or property rental throughout the entire tax year.
• Final Declaration:
  • Purpose: After all EOPS have been submitted, you must make a Final Declaration for the entire tax year. This declaration consolidates all your income sources, including any employment income, bank interest, dividends, and other taxable income not covered by the business or property EOPS. It also allows you to claim any personal allowances, reliefs, or tax credits.
  • Deadline: The Final Declaration must also be submitted by 31 January following the end of the tax year.
  • Tax Calculation: Your final income tax and National Insurance contributions will be calculated based on the information provided in your EOPS and Final Declaration.

Once the Final Declaration is submitted, HMRC will issue a tax calculation, and any tax due will need to be paid by the usual Self-Assessment payment deadlines (31 January and 31 July).

Exemptions from MTD ITSA

While MTD ITSA aims for broad coverage, certain individuals and entities may be exempt from the mandatory requirements. It is important to understand if you fall into one of these categories.

Income Below the Thresholds

The most common exemption is for those whose qualifying income remains below the mandatory thresholds.

• £50,000 Threshold: If your total gross income from self-employment and property for the tax year 2024/25 (or any subsequent tax year) is £50,000 or less, you are not mandated to join MTD ITSA from April 2026.
• £30,000 Threshold: Similarly, if your total gross income is £30,000 or less for the tax year 2025/26 (or any subsequent tax year), you are not mandated to join from April 2027.

It is crucial to remember that these thresholds apply to total gross income. If you have multiple income sources that individually fall below a threshold but collectively exceed it, you will still be mandated. For example, £28,000 from self-employment and £25,000 from property income totals £53,000, mandating you from April 2026.

Specific Exemptions

HMRC has outlined specific circumstances where a business or individual may be exempt from MTD ITSA, even if their income exceeds the threshold. These include:

• Religious Objections: Individuals whose religious beliefs prevent them from using electronic communications or keeping electronic records may apply for an exemption.
• Inability to Use Digital Tools: If it is not reasonably practicable for a person to use digital tools due to age, disability, remoteness of location (no internet access), or any other reason, they may be granted an exemption. This is typically assessed on a case-by-case basis by HMRC.
• Insolvency or Deceased Estates: Businesses undergoing insolvency procedures or the estates of deceased persons are generally exempt.
• Non-UK Businesses/Landlords: While MTD ITSA applies to UK property income regardless of the landlord's residence, certain complex international tax arrangements may have specific provisions.
• Certain Trusts and Estates: Some types of trusts and estates may be exempt, depending on their structure and income sources.

If you believe you qualify for an exemption, you must contact HMRC to apply. Do not assume you are exempt; continue to prepare for MTD ITSA until you receive official confirmation from HMRC.

Voluntary Early Adoption

Even if you are not mandated to join MTD ITSA, you can choose to do so voluntarily. This can be beneficial for businesses looking to streamline their accounting, gain better insights into their finances, and get ahead of future compliance requirements. Voluntary adoption allows you to familiarise yourself with the system and software before it becomes compulsory for your income bracket.

Penalties for Non-Compliance

HMRC is introducing a new points-based penalty system for MTD ITSA to encourage compliance with the regular reporting requirements. Understanding these penalties is crucial to avoid unnecessary fines.

The Points-Based Penalty System

This new system applies to late submissions of quarterly updates, End-of-Period Statements, and Final Declarations. It works as follows:

• Points for Late Submissions: For each late submission, you will receive one penalty point.
• Penalty Threshold: Once you reach a certain number of points, a financial penalty is triggered. The threshold depends on how frequently you are required to submit returns (e.g., for annual submissions, it might be 2 points; for quarterly, it could be 4 points).
• Financial Penalty: Once the penalty threshold is reached, you will receive a financial penalty, typically £200.
• Points Expiry: Points expire after a certain period of compliance. If you have a period of 12 months without any late submissions, your points total will reset to zero.
• Further Penalties: If you continue to miss deadlines after reaching the initial penalty threshold, further financial penalties can be imposed.

Scenario	Penalty
Late quarterly submission	Points-based system, financial penalties after thresholds
Late End-of-Period Statement	Points-based system, financial penalties after thresholds
Late Final Declaration	Points-based system, financial penalties after thresholds
Failure to keep digital records	Potential financial penalties
Inaccurate submissions	Potential financial penalties, depending on severity

Penalties for Late Payments and Inaccurate Submissions

In addition to the points-based system for late submissions, HMRC will also apply penalties for:

• Late Payments: If you do not pay your tax bill by the deadline (31 January and 31 July), you will be charged interest and may face late payment penalties. These penalties are separate from the MTD submission penalties and are based on the amount of tax owed and how late it is paid.
• Inaccurate Submissions: If HMRC discovers that your submissions are inaccurate and lead to an underpayment of tax, you could face penalties. The severity of the penalty depends on whether the inaccuracy was careless, deliberate but not concealed, or deliberate and concealed. Penalties can range from 0% to 100% of the additional tax due.
• Failure to Keep Digital Records: A specific penalty can be levied if you fail to maintain digital records as required by MTD.

Warning: The new penalty system is designed to be fairer than the previous regime, initially focusing on encouraging compliance rather than immediate financial penalties for minor slips. However, repeated non-compliance will quickly lead to financial penalties. It is always better to submit on time, even if estimates are used, and then correct them later.

Preparing for MTD ITSA: Your Action Plan

The transition to MTD ITSA requires proactive preparation. Starting early will ensure a smoother shift and minimise disruption to your business or property management. Here's a step-by-step action plan:

Step 1: Determine Your Start Date

• Assess Your Income: Review your gross income from all self-employment businesses and UK property rentals for the most recently completed tax year (e.g., 2024/25 for a 2026 start).
• Identify Your Threshold: Determine if your combined qualifying income exceeds £50,000 (for April 2026 mandate) or £30,000 (for April 2027 mandate).
• Check for Exemptions: If your income is above a threshold, consider if you meet any of the specific exemption criteria (e.g., religious objections, digital exclusion).

Step 2: Choose MTD-Compatible Software

This is arguably the most critical step. You cannot comply with MTD ITSA without appropriate software.

• HMRC-Recognised Software: Ensure the software you choose is officially recognised by HMRC as MTD-compatible for Income Tax. AccountsOS is fully MTD-ready.
• Key Features to Look For:
  • Digital Record Keeping: Ability to record income and expenses digitally, ideally with bank feed integration.
  • Categorisation: Tools to easily categorise transactions according to HMRC's requirements.
  • Quarterly Submission: Functionality to generate and submit quarterly updates directly to HMRC.
  • EOPS & Final Declaration Support: Features to help prepare your End-of-Period Statements and Final Declaration.
  • Usability: Intuitive interface and good customer support.
  • Cost: Consider subscription fees and value for money.
• Bridging Software: If you prefer to continue using spreadsheets, you will need separate bridging software to transmit the data to HMRC. This adds complexity and a potential point of error.

Step 3: Migrate Your Records to Digital

Once you have selected your software, begin transitioning your record-keeping.

• Start Early: Do not wait until your mandatory start date. Begin using your chosen software to record new transactions as soon as possible.
• Historical Data: You may need to import or manually enter historical data for the current tax year if you want a complete picture within your software. However, HMRC only requires digital records from your MTD start date.
• Training: Take advantage of any tutorials, webinars, or support offered by your software provider (like AccountsOS) to learn how to use the system effectively.

Step 4: Understand the MTD ITSA Process

• Quarterly Cycle: Familiarise yourself with the quarterly reporting periods and their respective deadlines. Set reminders.
• Adjustments: Understand what types of accounting adjustments you will need to make for your End-of-Period Statements.
• Final Declaration: Know what information is required for your Final Declaration, including non-business income.

Step 5: Seek Professional Advice (If Needed)

If your tax affairs are complex, or you feel overwhelmed by the changes, consider consulting with an accountant or tax advisor who is familiar with MTD. They can help you:

• Confirm your MTD start date and eligibility.
• Choose the most suitable MTD-compatible software.
• Set up your accounting system correctly.
• Ensure accurate and timely submissions.
• Navigate any complex tax situations under the new regime.

Benefits of Making Tax Digital

While the transition to MTD ITSA may seem daunting, it offers several significant benefits for self-employed individuals and landlords.

Reduced Errors

Digital record-keeping and direct submission reduce the potential for human error associated with manual data entry and calculations. Software can automate many processes and flag potential issues.

Real-time Financial Overview

With quarterly updates, you will have a much clearer and more up-to-date understanding of your business's financial performance and estimated tax liability throughout the year. This allows for better financial planning and budgeting.

Improved Cash Flow Management

Knowing your approximate tax bill earlier can help you set aside funds consistently, avoiding a large, unexpected payment at year-end. This proactive approach can significantly improve cash flow management.

Time Savings

While there is an initial setup phase, automated digital record-keeping and streamlined submission processes can save significant time compared to manual, year-end tax return preparation.

Easier Compliance

MTD-compatible software is designed to guide you through the compliance process, making it simpler to meet HMRC's requirements and avoid penalties.

How MTD ITSA Transforms Tax Planning. Under the old system, taxpayers often faced a significant tax bill at the end of the year, sometimes without sufficient funds set aside. MTD ITSA provides continuous visibility. By seeing your estimated tax position update quarterly, you can make informed decisions throughout the year, such as adjusting pricing, managing expenses, or setting aside appropriate savings, leading to fewer year-end surprises and better financial control.

HMRC Support and Resources

HMRC is providing extensive support and guidance to help businesses and landlords transition to MTD ITSA. It is highly recommended to utilise these resources.

Official HMRC Guidance Page

The primary source for all MTD information is the official HMRC guidance page. This page is regularly updated with the latest information, rules, and advice.

• Key Information: Find details on eligibility, how MTD works, exemptions, and how to sign up.
• Software List: HMRC publishes a list of software providers that have been tested and approved as MTD-compatible.
• Updates: The page reflects any changes to deadlines or policy, so regular checks are advisable.

Visit HMRC MTD Guidance

New Webinars and Catch-Up Sessions

As highlighted by the recent update on 7 May 2026, HMRC is actively running webinars and providing catch-up sessions specifically for MTD ITSA. These sessions are invaluable for understanding the practical aspects of MTD.

• Live Webinars: HMRC experts explain the requirements, demonstrate how MTD works, and answer common questions. These sessions are interactive and provide an opportunity to get direct clarification.
• Recorded Sessions: If you cannot attend a live webinar, recorded versions are typically made available for you to watch at your convenience. These cover the same essential information.
• Topics Covered: Webinars often cover topics such as:
  • Introduction to MTD ITSA
  • Digital record keeping explained
  • How to make quarterly updates
  • Understanding End-of-Period Statements and Final Declarations
  • Choosing and using MTD-compatible software
  • What to do if you're a landlord or have multiple businesses

Attending or watching these webinars is highly recommended for anyone affected by MTD ITSA. They provide practical advice and help demystify the new process. You can find schedules and links to recordings on the HMRC guidance page or by searching "HMRC MTD webinars" online.

Help and Support for Specific Circumstances

HMRC also provides tailored support for individuals facing particular challenges:

• Digitally Excluded: If you are genuinely unable to use digital tools (e.g., due to age, disability, or lack of internet access), HMRC has provisions for support and potential exemption. Contact their helpline to discuss your situation.
• Tax Agents: If you use an accountant or tax agent, they can sign you up for MTD and manage your submissions on your behalf, provided they use MTD-compatible agent software.
• Voluntary Sign-Up: Even if you are below the threshold, you can voluntarily sign up for MTD ITSA. HMRC's guidance covers this process.

The key message from HMRC is to engage early. Do not wait until the last minute to understand your obligations or to get your systems in place. The support is there to help you make a smooth transition.

How AccountsOS Helps with MTD ITSA Compliance

AccountsOS is built to simplify Making Tax Digital for self-employed individuals and landlords, ensuring you meet all HMRC requirements effortlessly.

MTD-Compatible Software

AccountsOS is MTD-ready, ensuring your digital records and quarterly updates meet HMRC requirements automatically.

Automated Record Keeping

Effortlessly categorise income and expenses, linking directly to bank feeds for compliant digital records.

Quarterly Update Generation

Generate and submit your quarterly income and expense summaries to HMRC directly from AccountsOS with ease.

End-of-Period Statement Support

Guidance and tools to help you prepare your End-of-Period Statements and make necessary adjustments.

Deadline Reminders

Receive timely notifications for quarterly updates, EOPS, and Final Declaration deadlines.

Real-time Tax Estimates

See your estimated tax liability update throughout the year, helping you budget and avoid surprises.

Frequently asked questions

What is Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)?

MTD ITSA is a new system requiring self-employed individuals and landlords to keep digital records of their income and expenses and send quarterly updates to HMRC using MTD-compatible software. It aims to make tax administration more efficient and reduce errors.

Who is affected by MTD ITSA from April 2026?

From 6 April 2026, MTD ITSA becomes mandatory for self-employed individuals and landlords with qualifying income over £50,000. This includes income from one or more businesses or property rentals.

What does 'qualifying income' mean for MTD ITSA?

Qualifying income refers to your total gross income from all self-employment businesses and property rentals. It is the total turnover before any expenses are deducted. If this combined figure exceeds the threshold, MTD ITSA applies.

What are the key deadlines under MTD ITSA?

Under MTD ITSA, you will need to submit quarterly updates of your income and expenses, an End-of-Period Statement (EOPS) for each business, and a Final Declaration. Quarterly updates are due one month after the end of each tax quarter, and the EOPS and Final Declaration are due by 31 January following the tax year.

Do I still need to submit an annual Self-Assessment tax return?

No. Once you are mandated into MTD ITSA, the annual Self-Assessment tax return (SA100) is replaced by the quarterly updates, End-of-Period Statements, and the Final Declaration. These digital submissions fulfil your reporting obligations.

Can I use spreadsheets for MTD ITSA?

Yes, but only if your spreadsheets are combined with 'bridging software' that can extract data from the spreadsheet and submit it to HMRC in an MTD-compliant format. Simply keeping records on a standalone spreadsheet is not sufficient.

What if my income drops below the MTD ITSA threshold after I've started?

If your qualifying income falls below the mandatory threshold, you may be able to opt out of MTD ITSA. However, you must continue to follow MTD rules until HMRC confirms you are no longer required to do so. It is advisable to consult with HMRC or a tax advisor.

Where can I find MTD-compatible software?

HMRC publishes a list of software providers that offer MTD-compatible solutions. AccountsOS is fully MTD-compliant and designed to help self-employed individuals and landlords meet their obligations seamlessly.

Related guides

• Self-Assessment Tax Guide
• Choosing Accounting Software
• All Tax Deadlines