The introduction of Making Tax Digital for Income Tax Self-Assessment (MTD for IT) marks a momentous change in how sole traders and landlords report their income to HMRC. It is essential for firms to prepare now to support clients in transitioning to the new digital system.

Who must comply and when?

MTD for IT will be introduced in phases from 6 April 2026, depending on an individual’s gross income (before expenses) from self-employment and/or property income, including overseas property.

The key dates are:

• From 6 April 2026: Individuals with gross income over £50,000
• From 6 April 2027: Threshold reduces to £30,000
• From 6 April 2028: Lowered again to £20,000.

HMRC has listed further key dates breakdown for filing obligations for the next three years.

Income from all relevant sources is combined for threshold purposes. If income falls below £30,000, a client may exit MTD after three consecutive years of lower income, based on submitted returns or quarterly updates.

Who is exempt?

The following are excluded from MTD for IT:

• individuals with income below the thresholds
• partnership members, including LLPs (in respect of partnership income)
• limited companies.

Some individuals may also qualify for an exemption due to age, disability or lack of digital access. Applications must be made to HMRC. Details and eligibility criteria are available on HMRC’s website.

Registration and onboarding

HMRC will review 2024–25 tax returns to identify those who meet the £50,000+ threshold and notify them that they must join MTD by 6 April 2026. The same process will apply a year later for those in the £30,000–£50,000 income band.

To comply, clients (or agents on their behalf) must:

• find compatible MTD software
• authorise the software
• sign up for MTD for IT via HMRC.

What’s involved?

MTD has three main requirements:

• Digital record-keeping: income and expenses must be digitally recorded, detailing the amount, category and date
• Quarterly updates: every three months, summary updates must be submitted to HMRC. These can follow either tax-year-aligned or calendar-based reporting periods
• End-of-year submission: after the final update, a digital tax return must be submitted, including adjustments, claims and any other income not covered in quarterly updates.

Penalties

Late submission penalties will follow a points-based system.

Missing deadlines adds points, and accumulating enough points results in a £200 penalty, with further penalties for repeated non-compliance. There are rights of review and appeal.

Late payment penalties and interest rules will also be harmonised as MTD is introduced.

Further information can be found on ACCA's MTD Hub