MTD for Income Tax: What Happens on 6 April 2026

From 6 April 2026, Making Tax Digital for Income Tax (MTD ITSA) becomes mandatory for around 864,000 sole traders and landlords in the UK. If your qualifying income exceeded £50,000 in the 2024-25 tax year, this affects you. Here is exactly what changes, what you are required to do, and what stays the same.

Who Must Comply From 6 April 2026

MTD ITSA is being introduced in phases based on qualifying income. Phase 1 applies from 6 April 2026 to anyone whose total qualifying income for the 2024-25 tax year exceeded £50,000.

Qualifying income means the combined gross income from self-employment and UK property, before deducting any expenses. It is your turnover, not your profit.

If you have both a self-employment business and a rental property, you add both income streams together to arrive at your qualifying income figure. HMRC confirmed this in its GOV.UK guidance on working out your qualifying income.

Phase 2 starts on 6 April 2027 for those with qualifying income above £30,000 in 2025-26, and Phase 3 starts on 6 April 2028 for those above £20,000 in 2026-27.

What Changes on 6 April 2026

Three things change for Phase 1 taxpayers from this date.

First, you must keep digital records. Income and expenses from your self-employment or property businesses must be recorded digitally using HMRC-recognised software. Spreadsheets and paper records alone are no longer sufficient if they are not connected to compatible software that can submit to HMRC.

Second, you must submit quarterly updates to HMRC. Instead of one annual Self Assessment return for your trading and property income, you send four quarterly updates every tax year. Each update reports your income and expense totals for that quarter through your software. The four deadlines for the 2026-27 tax year are:

Third, you must use HMRC-recognised compatible software. You cannot submit quarterly updates through HMRC's own website. You need software that appears on HMRC's list of compatible software for MTD for Income Tax. Options include Xero, QuickBooks, FreeAgent, and Sage, among others.

What Does Not Change

Several things people worry about remain unchanged.

Your payment dates are the same. MTD ITSA does not alter when you pay your tax. The balancing payment for 2025-26 and the first payment on account for 2026-27 are both due on 31 January 2027. The second payment on account remains 31 July 2027.

Self Assessment is not abolished. You still submit a final declaration (the MTD equivalent of a Self Assessment return) by 31 January each year after the tax year ends. For 2026-27, your final declaration deadline is 31 January 2028. The final declaration confirms your full-year figures, claims allowances, and finalises your tax position.

Your National Insurance obligations are not affected. MTD ITSA relates to Income Tax reporting only.

Dividends, savings interest, and employment income are not reported through MTD quarterly updates. These remain part of your final declaration.

The Soft-Landing Period: 2026-27 Only

HMRC has confirmed a soft-landing arrangement for Phase 1 taxpayers in the first year of mandatory compliance. During the 2026-27 tax year, HMRC will not issue penalty points for late quarterly updates.

This does not mean the deadlines can be ignored. You must still submit all four quarterly updates before you can file your final declaration. The soft landing only applies to the penalty points system for quarterly updates. Late final declarations and late payments carry their own penalties, which are unaffected by the soft landing.

The soft landing will not be extended beyond 2026-27 based on current HMRC guidance.

If You Have Multiple Income Sources

If you have more than one source of qualifying income (for example, a self-employment business and a rental property), you must submit a separate set of quarterly updates for each source. Each income source is reported independently.

You must sign each income source up for MTD individually when you register. HMRC's sign-up service allows you to add multiple sources during registration.

If You Are Not Sure Whether You Must Comply

Your obligation depends on your qualifying income for the 2024-25 tax year. The relevant figure is on your 2024-25 Self Assessment tax return (the one due 31 January 2026). If your combined gross self-employment and property income for that year exceeded £50,000, you are in Phase 1.

You can use the MTD eligibility checker on GOV.UK to confirm your position.

If you are close to the threshold, check your figures carefully. Qualifying income is gross turnover before expenses, not net profit.

Exemptions

A small number of taxpayers may qualify for an exemption from MTD ITSA. HMRC grants exemptions in cases where it is not reasonably practicable to use digital tools, for example due to age, disability, or lack of internet access where no suitable alternative exists. Members of certain religious groups whose beliefs prevent digital filing may also qualify.

Exemptions are not automatic. You must apply to HMRC directly. Guidance on how to apply for an exemption is on GOV.UK.

What to Do Before 6 April 2026

There are three practical steps to take before the deadline:

1. Confirm your qualifying income. Check your 2024-25 Self Assessment return. If your combined gross self-employment and property income exceeded £50,000, you must comply from 6 April.
2. Choose and set up compatible software. You cannot submit your first quarterly update without it. HMRC's compatible software list covers dozens of options across different price points.
3. Sign up for MTD ITSA. Register at GOV.UK before 6 April. Your accountant can also register on your behalf.

For a full walkthrough of how MTD ITSA works, what software to choose, and how to prepare, see our complete MTD guide.

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DigiTaxHub.co.uk is an independent information resource and is not affiliated with or endorsed by HMRC. This article is for information purposes only and does not constitute tax or financial advice. Always verify current rules at GOV.UK and speak to a qualified accountant if you are unsure.