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tax-deadlinesUpdated 2026-02-27

When does Making Tax Digital for Income Tax start?

Quick Answer

MTD for Income Tax Self Assessment starts in April 2026 for those with qualifying income over £50,000, April 2027 for £30,000+, and April 2028 for £20,000+.

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Detailed Explanation

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is being rolled out in phases based on your qualifying income — your combined gross self-employment and UK property income before expenses.

Phase 1 — April 2026

Individuals with qualifying income over £50,000 must comply. Sign-up opened from October 2025.

Phase 2 — April 2027

The threshold drops to £30,000. This also includes farmers, writers, and musicians who were previously deferred.

Phase 3 — April 2028

The threshold drops further to £20,000.

Note that MTD for VAT has been mandatory since April 2022 for all VAT-registered businesses regardless of turnover.

Under MTD ITSA, you must keep digital records and submit quarterly updates to HMRC using compatible software, followed by an annual Final Declaration by 31 January. There is a soft landing period for the first year (2026/27) where no penalty points will be issued for late quarterly updates.

For more detail on what MTD means in practice, see our guide on [Making Tax Digital](/making-tax-digital).

Source: HMRC MTD ITSA Implementation Timeline

Real-World Examples

Freelance Developer Over £50k

You earn £65,000 gross from freelance software development. From April 2026, you must use MTD-compatible software to keep digital records and submit quarterly updates to HMRC.

Landlord With Multiple Properties

You earn £38,000 in gross rental income across three buy-to-let properties. You are not in scope for April 2026 (under £50k) but will need to comply from April 2027 when the threshold drops to £30,000.

Side-Hustle Earner

You earn £22,000 from a side business alongside your full-time job. Your PAYE income does not count towards the MTD threshold. You will come into scope from April 2028 when the threshold reaches £20,000.

Common Mistakes to Avoid

  • Confusing qualifying income (gross, before expenses) with taxable profit — you could have low profit but high turnover and still be in scope.
  • Assuming MTD ITSA applies to limited companies — it does not. Corporation Tax MTD has been cancelled.
  • Not realising that sign-up opened from October 2025 — you do not need to wait until April 2026 to prepare.
  • Forgetting that MTD for VAT is already mandatory since April 2022, regardless of these new ITSA thresholds.

Does my PAYE salary count towards the MTD threshold?

No. Only gross income from self-employment and UK property counts as qualifying income. Employment income paid via PAYE is excluded.

Can I sign up for MTD ITSA before my threshold date?

Yes. Voluntary sign-up has been available since October 2025. Early sign-up lets you get familiar with digital record-keeping before it becomes mandatory.

What if my income fluctuates around the threshold?

You are assessed based on the qualifying income shown on your latest Self Assessment return. If you were above £50,000 on your 2024/25 return, you are in scope from April 2026.

Is there a soft landing for the first year?

Yes. For 2026/27, HMRC will not issue penalty points for late quarterly updates. However, the Final Declaration (due 31 January 2028) is still subject to penalties.

Practical Tips

  • Check your 2024/25 Self Assessment return to see if your combined self-employment and property income exceeds the relevant threshold.
  • Start using MTD-compatible software now to build the habit of digital record-keeping before it becomes mandatory.
  • If you are close to a threshold boundary, consider whether voluntarily signing up early would reduce stress when the deadline arrives.
  • Set calendar reminders for quarterly submission deadlines: 7 August, 7 November, 7 February, and 7 May.

Related Questions

What is Making Tax Digital (MTD)?

Making Tax Digital is HMRC's initiative requiring businesses to keep digital records and submit returns using compatible software. VAT is already under MTD; Income Tax follows in April 2026.

Do I need accounting software for Making Tax Digital?

Yes, if you're VAT-registered you must already use MTD-compatible software. From April 2026, self-employed and landlords earning over £50,000 must also use MTD-compatible software for Income Tax.

What counts as qualifying income for Making Tax Digital?

Qualifying income is your combined gross income from self-employment and UK property (rental), measured before expenses. It is turnover, not profit. Employment income and dividends do not count.

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