Making Tax Digital for Income Tax: are you affected?
Making Tax Digital for Income Tax (MTD ITSA) changes how self-employed people and landlords keep records and report income to HMRC. It's being rolled out in phases based on income, and the first phase is already in effect.
At a glance
- Mandatory from April 2026 for combined self-employment/property income over £50,000.
- Thresholds fall to £30,000 (2027) and then £20,000 (2028); more people are pulled in each year.
- Replaces one annual return with digital record-keeping and quarterly updates to HMRC.
- Below the threshold today doesn't mean exempt forever, so it's worth planning ahead regardless.
The phased thresholds
- From 6 April 2026: mandatory if your combined self-employment and property income is over £50,000 (based on your qualifying income for the relevant prior tax year).
- From 6 April 2027: the threshold drops to £30,000.
- From 6 April 2028: the threshold drops again to £20,000.
If your income is below the threshold that currently applies to you, you don't need to comply yet, but the thresholds are falling each year, so it's worth planning ahead rather than waiting to be caught out.
What actually changes
Instead of one annual Self Assessment return, MTD ITSA requires:
- Digital records of income and expenses, kept using compatible software.
- Quarterly updates submitted to HMRC throughout the year.
- A final declaration after the year end, replacing the old Self Assessment return for those in scope.
Not sure if you're affected? Qualifying income is based on your gross self-employment and property income (before expenses) from your return for the relevant earlier tax year, not your profit. It's worth checking this specifically rather than assuming based on your take-home income.
Getting ahead of it
The businesses that find MTD ITSA straightforward are usually the ones who move to compatible digital record-keeping well before their threshold applies, rather than switching systems in a rush the month it becomes mandatory.
This article is general information, not personal tax advice, and HMRC's rules and thresholds can change. Get in touch if you'd like help working out when MTD ITSA will apply to you and getting set up ahead of time.