Making Tax Digital for Income Tax (MTD for ITSA) is HMRC’s programme to require self-employed individuals and landlords to keep digital records and submit income and expenses information quarterly using compatible software. It represents a significant change to how income tax is reported and paid.
What Is MTD for Income Tax?
Currently, most self-employed individuals and landlords file a Self Assessment tax return once a year, summarising all income and expenses for the previous tax year. MTD for Income Tax replaces this with a system of quarterly digital submissions, plus a final end-of-period statement each year.
Instead of one annual return, you submit four quarterly updates, then a final declaration confirming the year figures. HMRC aims to give taxpayers a more accurate and real-time picture of their tax liability throughout the year.
Who Does MTD for Income Tax Apply To?
MTD for Income Tax is being rolled out in phases based on total gross income (not profit) from self-employment and property combined:
- From April 2026: self-employed individuals and landlords with combined income over £50,000
- From April 2027: those with combined income over £30,000
- From April 2028: those with combined income over £20,000
These thresholds apply to gross income before expenses. If your total self-employment and rental income combined exceeds the relevant threshold, you will come within scope.
Note: thresholds and implementation dates are set by HMRC and subject to change. Always verify current requirements on the gov.uk website before making decisions based on them.
What Does Compliance Require?
To comply with MTD for Income Tax, you need to:
- Keep digital records of all business income and expenses
- Submit a quarterly update to HMRC through MTD-compatible software for each period
- Submit a final declaration at the end of the tax year to confirm all income and any adjustments
The quarterly updates do not need to include every piece of accounting detail. They are a summary of income and expenses for the period. However, the underlying records must be kept digitally and be available if HMRC requests them.
What Is MTD-Compatible Software?
You must use software that is recognised by HMRC as MTD-compatible for Income Tax. HMRC maintains an approved software list on gov.uk. Most mainstream UK accounting packages support MTD for Income Tax, but confirm compatibility before choosing or continuing with any software.
A spreadsheet alone does not meet the requirement unless it is used with a recognised bridging tool. For most people coming within MTD for Income Tax scope, dedicated accounting or bookkeeping software is the practical answer.
What Are the Quarterly Deadlines?
Under MTD for Income Tax, the tax year is divided into four reporting periods. The current deadlines for quarterly submissions are:
- Quarter 1 (6 April to 5 July): submission due 5 August
- Quarter 2 (6 July to 5 October): submission due 5 November
- Quarter 3 (6 October to 5 January): submission due 5 February
- Quarter 4 (6 January to 5 April): submission due 5 May
The final declaration is due by 31 January following the end of the tax year, the same deadline as the current tax return.
Does MTD for Income Tax Replace Self Assessment?
MTD for Income Tax is an evolution of Self Assessment rather than a complete replacement. The annual final declaration replaces the traditional Self Assessment return for those within scope. If you are within MTD scope, you file quarterly updates plus the final declaration rather than a single annual return.
Those not yet within MTD scope continue to file standard Self Assessment returns until they come within a threshold.
Will My Accountant Handle This for Me?
Yes. Accountants and tax advisers can be authorised to submit MTD updates on your behalf using agent software. However, your records must still be kept digitally in MTD-compatible software, even if your accountant handles the submissions.
If you have an accountant, discuss with them how your MTD compliance will work in practice. They will likely have a preferred software they recommend and a process for handling quarterly submissions efficiently.
Getting Ready
If you are approaching the income threshold that will bring you within scope, the most practical step is to start using MTD-compatible accounting or bookkeeping software now. Getting used to the software before you are required to use it makes the transition much easier.
Check HMRC current approved software list and confirm the software you choose covers MTD for Income Tax specifically, not just MTD for VAT.
See our guide on What Is Making Tax Digital for a broader overview of the MTD programme, and our guide on MTD-compatible accounting software for what to look for when choosing software for compliance.
