Making Tax Digital for Income Tax: who it affects and what changes

Making Tax Digital (MTD) for Income Tax replaces the once-a-year routine for many sole traders and landlords. Instead, you keep digital records and send HMRC a short update every quarter, then confirm your figures at the end of the year.

When it starts for you

HMRC looks at the Self Assessment return from two tax years before each start date.

What counts as qualifying income

Add together your gross self-employment income and your gross property income, before taking off any expenses. A landlord with £25,000 of rent and a sole trader business turning over £30,000 has £55,000 of qualifying income, even if their profits are much lower.

These don't count: employment income, pensions, dividends, savings interest, and your share of partnership profits.

What you'll have to do

1. Keep records of income and expenses in software that works with MTD.
2. Send a quarterly update by 7 August, 7 November, 7 February and 7 May.
3. Submit a final declaration by 31 January after the tax year ends. This replaces your Self Assessment return.

There are no penalty points for late quarterly updates in the 2026 to 2027 tax year. They start to apply after that.

Exemptions

Some people are exempt automatically, including trustees and personal representatives. Partnerships aren't included yet. If you can't use digital tools because of age, health, disability, religious belief or lack of internet access, you can apply to HMRC for an exemption.

Check where you stand

Use our MTD checker to see whether and when it applies to you.