If you’re self-employed or a landlord, one of the biggest changes to the UK tax system in years has already begun — and many people aren’t ready for it.
HMRC’s Making Tax Digital for Income Tax (MTD for ITSA) has started rolling out from April 2026, and it changes how you keep records and report your income to HMRC. Here’s what you need to know.
What is Making Tax Digital for Income Tax?
MTD for Income Tax replaces the traditional annual Self Assessment tax return with a new system of digital record-keeping and quarterly reporting. Instead of filing one return each January, you’ll submit updates to HMRC four times a year, plus a final year-end declaration.
The aim is to reduce errors, improve accuracy, and give both you and HMRC a more up-to-date picture of your tax position throughout the year.
Who does it apply to — and when?
The rollout is being phased by income level:
- From April 2026 — Self-employed individuals and landlords with qualifying income above £50,000
- From April 2027 — Those with qualifying income above £30,000
- From April 2028 — Those with qualifying income above £20,000
One important point: qualifying income means your total gross income (turnover), not your profit. So if you’re a sole trader with £45,000 in sales and also receive £6,000 in rental income, your qualifying income is £51,000 — meaning you’re in scope from April 2026.
What do you actually have to do?
Under MTD for Income Tax, you’ll need to:
- Keep digital records of all income and expenses — paper records and spreadsheets that don’t connect to HMRC-approved software no longer meet the requirements
- Submit four quarterly updates to HMRC — due by the 7th of August, November, February, and May each year
- File a final declaration by 31 January after the end of the tax year, similar to the current Self Assessment deadline
The quarterly updates are summaries of your income and expenses — they’re not four separate tax returns. But they do need to be submitted through HMRC-compatible software such as QuickBooks, Xero, or FreeAgent.
What happens if you don’t comply?
HMRC has introduced a new points-based penalty system. You’ll accumulate penalty points for missed quarterly submissions, and once you hit a threshold, a financial penalty applies. There is a soft landing in place for the first year (2026/27), meaning penalties for late quarterly updates will be applied more leniently — but that grace period won’t last forever.
Are there any exemptions?
Yes, limited exemptions exist. HMRC is now accepting applications from those who are digitally excluded — for example, due to age, disability, or living in an area with poor internet access. If you think you may qualify, it’s worth checking your eligibility sooner rather than later.
How RK & CO can help
At RK & CO Chartered Certified Accountants in Manchester, we’re already helping our clients get MTD-ready. Whether you need help choosing the right software, setting up digital bookkeeping, or understanding exactly when the rules apply to you, we’re here to make it simple.
Don’t wait until a deadline is approaching — the earlier you prepare, the smoother the transition will be.
📞 Call us on 0161 400 7220
📧 Email info@rkaccountants.co.uk