MTD for Income Tax is part of the UK government’s digital tax strategy. Under MTD, eligible taxpayers must:

1. Keep digital records of income and expenses
2. Submit quarterly updates to HMRC using approved software
3. File an annual declaration confirming the tax due

This digital approach is designed to reduce errors, make record keeping easier, and provide HMRC with up-to-date tax information.

• Self-employed individuals with combined annual business income exceeding £50,000 (mandatory from April 2026), and those with income between £30,000 and £50,000 (mandatory from April 2027).

• Landlords with combined annual property income exceeding £50,000 (mandatory from April 2026), and those with income between £30,000 and £50,000 (mandatory from April 2027).

Taxpayers below the threshold are currently exempt but may voluntarily join MTD to simplify tax management.

Learn more about Self-Learn more about Self-Assessment for Self-Employed Individul

1. Use HMRC-Recognised Software

Spreadsheets or manual records are not sufficient. HMRC-approved accounting software or apps must be used to submit digital records and updates.

2. Keep Accurate Digital Records

All income, expenses, and allowances should be recorded digitally in real time. This reduces errors and makes quarterly reporting easier.

3. Submit Quarterly Updates

Instead of just submitting an annual tax return, taxpayers will provide updates to HMRC every three months. This ensures that your tax position is monitored throughout the year.

4. File an End-of-Year Declaration

At the end of the tax year, you submit a final declaration confirming your total income and tax due, reconciling the quarterly updates.

• Greater accuracy: Fewer mistakes in reporting
• Real-time tracking: Monitor tax obligations continuously
• Simpler end-of-year filing: Less stress during self-assessment
• Transparency: HMRC can quickly access up-to-date records if needed

• Choose HMRC-approved software early to familiarise yourself with the process.
• Digitise existing paper records before your first reporting period.
• Separate personal and business finances to avoid confusion.
• Consult an accountant if your income streams are complex.

Q1: Is MTD for Income Tax mandatory?
A: Yes, for self-employed individuals and landlords earning over £10,000 annually. Those below the threshold may join voluntarily.

Q2: Can I still use spreadsheets for MTD?
A: No, HMRC requires digital record-keeping through compatible software. Some software can import spreadsheet data, but spreadsheets alone are not compliant.

Q3: What if I miss a quarterly update?
A: Late submissions may result in penalties. It’s important to maintain timely reporting.

Q4: When will MTD for Income Tax apply to me?
A: Most eligible taxpayers must comply from April 2026, but early preparation is recommended.

Q5: Does MTD replace self-assessment?
A: Not entirely. MTD requires quarterly updates, but an annual declaration is still necessary to confirm your tax liability.

Making Tax Digital for Income Tax is the UK government’s step toward a modern, efficient, and accurate tax system. While transitioning to MTD may seem challenging, preparing early by choosing the right software and keeping accurate digital records can make the process straightforward.

By embracing MTD, UK taxpayers can simplify their tax reporting, reduce errors, and stay fully compliant with HMRC.