What is the HMRC Making Tax Digital for Income Tax timeline and who is affected?

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Making Tax Digital for Income Tax -- Timeline and Scope Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is a fundamental change to how self-employed people and landlords report their income to HMRC. Rather than an annual Self Assessment return, affected taxpayers must keep digital records and submit quarterly updates to HMRC using compatible software, plus a final annual declaration. Phased rollout timetable Phase 1 -- April 2026: Sole traders and landlords with qualifying income over GBP 50,000 per year must comply. 'Qualifying income' means gross income from self-employment and/or property -- it is the total turnover figure, not profit. Phase 2 -- April 2027: Expanded to sole traders and landlords with qualifying income over GBP 30,000 per year. Phase 3 -- April 2028 (provisionally): Those with qualifying income over GBP 20,000 are expected to be mandated, though this threshold has not been legislated in full. Partnerships: General partnerships were expected from 2025 but were deferred; the revised timeline had not been fully confirmed as of June 2026 -- check HMRC updates. What taxpayers must do under MTD for ITSA 1. Use HMRC-compatible software (such as QuickBooks, Xero, FreeAgent, or other approved tools) to keep digital records. 2. Submit quarterly updates to HMRC (four times a year, within one month of each quarter end). 3. Submit a final declaration (replacing the annual Self Assessment return) by 31 January following the tax year. Quarterly update deadlines: - Quarter 1 (6 April to 5 July): due by 5 August - Quarter 2 (6 July to 5 October): due by 5 November - Quarter 3 (6 October to 5 January): due by 5 February - Quarter 4 (6 January to 5 April): due by 5 May Who is exempt - Those with qualifying income below the relevant threshold - Taxpayers with certain disabilities or religious objections (digital exclusion exemption) - Partnerships (until further notice for general partnerships; LLPs deferred separately) - Trusts and estates (not yet included) Penalty reform MTD for ITSA introduces a new points-based penalty system for late submissions, replacing the flat penalty regime. Points accumulate for each missed quarterly update; once the threshold is reached, a GBP 200 financial penalty applies. The points system resets after a period of compliance. Action to take now If your qualifying income is above GBP 30,000, you should be selecting compatible software and beginning digital record-keeping now, well before the mandation date, to avoid a difficult last-minute transition.

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