When does Making Tax Digital for Income Tax become mandatory in the UK?

Full answer

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC's programme to move self-employed individuals and property landlords to digital record-keeping and quarterly reporting. The rollout is phased by income level. Mandatory start dates: - April 2026: self-employed individuals and landlords with total qualifying income (gross, before expenses) above GBP 50,000 must comply - April 2027: the threshold drops to GBP 30,000 -- those with income above this level must join - April 2028: a further reduction to GBP 20,000 is planned, bringing in a larger group of smaller landlords and sole traders What MTD ITSA requires: Instead of one annual Self Assessment return, affected taxpayers must: 1. Keep digital records using HMRC-compatible software (spreadsheets alone are not sufficient unless linked to bridging software) 2. Submit quarterly updates to HMRC for each income source (self-employment and/or property) 3. Submit an end-of-period statement (EOPS) and a final declaration annually to confirm the figures and claim any adjustments The quarterly updates do not replace the annual return; they supplement it. HMRC uses them to build a running picture of tax liability during the year. Who is currently exempt: - Partnerships are not included in the current rollout timetable (a separate consultation is ongoing) - Taxpayers with income below the relevant threshold remain on standard annual Self Assessment - Those with only PAYE income are not affected Penalties for non-compliance: HMRC introduced a new points-based penalty system alongside MTD ITSA. Each missed quarterly submission earns a point; a penalty charge is triggered when accumulated points reach a threshold (four points for quarterly filers = GBP 200 penalty). Businesses and landlords approaching the GBP 50,000 threshold should begin selecting compatible software now and testing digital record-keeping before their mandatory start date.

Try the calculator