If you're self-employed, a landlord, or earning income from both, there's a good chance the biggest change to UK personal tax in a generation is already knocking on your door.
From 6 April 2026, Making Tax Digital for Income Tax (MTD for IT) became mandatory for the first wave of taxpayers — and HMRC is not waiting for people to catch up. Millions more will follow in 2027 and 2028 as the income thresholds drop further.
This guide explains exactly what's changing, who it affects right now, and what to do before it catches you off guard.
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax — also known as MTD for IT or MTD ITSA — is HMRC's plan to replace the traditional annual Self Assessment tax return with a more frequent, software-driven system. Instead of filing once a year, affected taxpayers will now need to:
Keep digital records throughout the year using HMRC-compatible software
Submit four quarterly updates to HMRC summarising income and expenses
Complete a Final Declaration at year-end (replacing the old SA return) to confirm your total tax position
The goal, from HMRC's perspective, is to reduce errors, improve real-time visibility of taxpayer income, and move the entire system into the digital age. The reality for taxpayers is that it requires a genuine shift in how financial records are kept day to day.
It's important to understand what MTD for Income Tax does not cover: this is about Income Tax for individuals only. VAT-registered businesses are already under MTD for VAT (which has been live since 2022), and Corporation Tax for limited companies has not yet entered the MTD framework. If you operate through a limited company, MTD for IT does not apply to you at all.
Who Is Affected — The Threshold Timeline
MTD for IT is being rolled out in three waves, each based on your qualifying income for a specific tax year:
WaveStart DateIncome ThresholdBased OnWave 16 April 2026Over £50,0002024/25 gross incomeWave 26 April 2027Over £30,0002025/26 gross incomeWave 36 April 2028Over £20,0002026/27 gross income
Qualifying income is the total combined gross income (before expenses) from self-employment and UK or overseas property. These two sources are added together — so even if neither crosses the threshold on its own, the combined figure is what matters.
Example: A sole trader earning £28,000 from their trade, plus £23,500 from a buy-to-let property, has qualifying income of £51,500. They're caught by Wave 1 from April 2026, even though neither income stream individually exceeds £50,000.
This combined-income rule catches many landlords and self-employed individuals who assume they're safely under the threshold — often without realising it.
Who Is Currently Exempt
Not everyone is brought in under the current rules. The following are either deferred or exempt:
Limited companies — Corporation Tax is not yet within MTD
Partnerships and LLPs — partnership income is not yet mandated under MTD for IT, though individual partners can still be caught if their own qualifying income meets the threshold
Trusts and estates — currently excluded
Those below the income threshold — they continue filing under the existing Self Assessment system until their qualifying income brings them in scope
There are also specific exemptions available in limited circumstances — for example, for those with a disability or older age who cannot engage with digital systems. Our tax advisory team can confirm whether any exemption applies in your situation and handle the application with HMRC on your behalf.
What Actually Changes in Practice
For taxpayers brought into MTD, the practical day-to-day impact is significant.
- Digital Record-Keeping From Day One
You'll no longer be able to gather receipts at year-end and hand them to your accountant in a folder. Income and expenses must be logged in MTD-compatible software as they occur. This is where bookkeeping and digital record management becomes essential throughout the year, not just at tax time.
- Four Quarterly Updates to HMRC
Each quarter, a summary of your income and expenses must be submitted to HMRC digitally. These are not tax payments — they're updates. But they form part of the record HMRC uses to track your tax position in real time, and errors or late submissions attract penalties.
- Final Declaration at Year-End
At the end of the tax year, you'll submit a Final Declaration — essentially replacing the old Self Assessment return — confirming your full income picture, including any adjustments, allowances, or reliefs. For landlords, this is where landlord-specific tax reliefs and allowances are applied. For investors, any relevant Capital Gains Tax positions will also need to be reported in the broader tax picture.
- MTD-Compatible Software Is Mandatory
Spreadsheets alone are not acceptable under MTD — records must be kept in HMRC-recognised software, or bridged through software that can interact with HMRC's systems. The most widely used platforms are Xero and QuickBooks, both of which Hayes Chartered Certified Accountants are trained to set up and manage on your behalf.
Why You Shouldn't Wait for the Letter From HMRC
Many taxpayers assume they're safe until HMRC writes to them confirming they must join. That's a risky assumption for two reasons.
First, the legal obligation to assess whether you're in scope sits with you, not with HMRC. A letter is a courtesy — not a prerequisite to compliance.
Second, the transition itself takes time. Software needs to be set up and connected to HMRC's systems. Historic records often need to be reorganised before they can be digitised properly. And the first set of quarterly submissions are where most errors happen — typically because people are filing under pressure, for the first time, with a system they haven't had time to learn.
For small businesses, freelancers, and landlords managing multiple properties, getting ahead of this transition is almost always less expensive and less stressful than being forced into it at the last minute.
How Hayes Chartered Certified Accountants Can Help
Hayes Chartered Certified Accountants and Tax Consultants provides a complete, end-to-end Making Tax Digital service for sole traders, landlords, and individuals across London and the UK. Our ACCA-certified team handles everything from initial eligibility checks through to quarterly submissions and the Final Declaration.
Our MTD services include:
Eligibility check — we calculate your qualifying income and confirm exactly when (or whether) MTD applies to you
HMRC registration — full sign-up and account setup with HMRC
Software setup — installation, configuration, and training on Xero or QuickBooks
Quarterly updates — we prepare and submit all four quarterly updates on your behalf
Final Declaration — full year-end filing, including all available reliefs and allowances
Ongoing bookkeeping — digital record management throughout the year so you're never scrambling at quarter-end
Exemption applications — where relevant, we handle exemption requests and all HMRC correspondence
If you're not yet in scope, we can also continue to manage your Self Assessment tax return under the current system while helping you plan ahead for whichever threshold year will eventually apply to you.
Frequently Asked Questions
Does MTD for Income Tax affect my VAT return?
No — MTD for VAT and MTD for Income Tax are separate obligations. If you're VAT-registered, you may already be meeting MTD requirements for VAT. MTD for IT is an additional, separate mandate for Income Tax. See our VAT return services.
What software do I need for MTD?
You'll need HMRC-recognised software. Hayes uses Xero and QuickBooks, both of which are fully MTD-compatible. We set this up for you and handle all submissions through the software directly.
Do I still pay tax the same way?
Yes — quarterly updates are not tax payments. You still pay any Income Tax owed under the standard payment schedule. The Final Declaration replaces the old Self Assessment return.
What happens if I miss a quarterly submission?
HMRC has introduced a new points-based penalty system for late submissions. Missing a submission accrues a point, and once you hit the threshold (four points for quarterly filers), a financial penalty applies. Ongoing non-compliance results in further daily penalties.
I earn below £50,000 this year — do I need to do anything?
Not yet, if your qualifying income is genuinely below the relevant threshold. But if you're between £20,000 and £50,000, the 2027 and 2028 threshold drops will likely catch you. Starting to keep digital records now costs little and makes the eventual transition far smoother.
Get Ahead of MTD — Book a Free Consultation
Whether you're already in scope from April 2026, keeping a close eye on the 2027 £30,000 threshold, or simply want to understand where you stand before HMRC gets in touch, the earlier you move on this, the better.
Book a free 15-minute consultation with Hayes Chartered Certified Accountants and we'll tell you exactly where you stand, what you need to do, and when — with no jargon and no obligation.
