Comparison Guide Β· 2026/27
Making Tax Digital vs Paper Self Assessment UK 2026
Making Tax Digital (MTD) for Income Tax is being phased in for self-employed people and landlords whose qualifying income exceeds thresholds set by HMRC, replacing the single annual self assessment return with digital record-keeping and quarterly in-year updates. This guide compares MTD with traditional paper or online self assessment for 2026/27, covering who is affected, software costs and the practical differences in record-keeping.
At a Glance
| Feature | Making Tax Digital for Income Tax | Paper/Online Self Assessment |
|---|---|---|
| Who it applies to | Self-employed/landlords above HMRC qualifying income thresholds, phased in from April 2026 | Everyone else who needs to self assess |
| Record-keeping | Digital records required in MTD-compatible software | Any method β spreadsheet, paper, software |
| Submission frequency | Quarterly updates plus a final declaration | One annual return |
| Software required | Yes β compatible software or bridging software | Optional β paper form or HMRC online portal accepted |
| Underlying tax rules | Unchanged β same income tax and Class 4 NIC rules | Unchanged |
| Filing deadlines | Quarterly update deadlines plus year-end declaration deadline | Paper: 31 October; online: 31 January |
When You Must Use Making Tax Digital
- Your qualifying self-employment or property income exceeds the threshold HMRC has set for your phased start date
- You want more frequent visibility of your in-year tax position through quarterly updates
- You are comfortable moving record-keeping into compatible software (or bridging software from a spreadsheet)
When Traditional Self Assessment Still Applies
- Your qualifying income is below the relevant MTD threshold for your phase
- You prefer a single annual return rather than quarterly submissions
- You want to avoid the ongoing cost of MTD-compatible software (though budgeting for it in advance is wise if you expect to cross the threshold soon)
Frequently Asked Questions
Who has to join Making Tax Digital for Income Tax?
Making Tax Digital (MTD) for Income Tax is being phased in for self-employed people and landlords based on qualifying income, rolling out in stages from April 2026. HMRC has published the qualifying income thresholds and phased start dates for each cohort β check gov.uk for the exact threshold and start date that applies to your qualifying income, as the phasing has been adjusted more than once since it was first announced.
What does MTD actually require that paper/online self assessment does not?
Under MTD for Income Tax you must keep digital records of your business income and expenses using MTD-compatible software, and submit quarterly updates to HMRC throughout the tax year, followed by a final declaration after the year ends. Traditional self assessment, by contrast, only requires a single annual return (whether filed on paper or via HMRC's online service), with no in-year quarterly submissions.
Does MTD change how much tax I owe?
No β MTD changes how and how often you report your income and expenses, not the underlying tax rules, rates or allowances used to calculate what you owe. Your income tax and Class 4 National Insurance liability is still worked out on the same basis; MTD is a reporting and record-keeping reform, not a change to tax calculation.
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Do I need to buy software to comply with MTD?
Yes, in almost all cases β MTD for Income Tax requires the use of HMRC-recognised compatible software (or bridging software linked to a spreadsheet) to keep digital records and submit quarterly updates; paper records and manual online submission through the standard self assessment portal are not accepted once you are within MTD. Software costs vary by provider and package, so budget for an ongoing subscription if you are moved into MTD.
Can paper self assessment still be used at all?
Paper self assessment tax returns remain available for those not brought into MTD (for example, income below the qualifying threshold, or other exclusions), though HMRC has been encouraging a shift to online filing generally and paper deadlines are earlier than the online self assessment deadline. Once your qualifying income brings you into MTD for Income Tax, paper and standard online self assessment filing for that income is replaced by the quarterly digital process β check gov.uk for your specific position.
Key Sources
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Disclaimer: This comparison is general information, not personal tax advice. MTD income thresholds and phased start dates have been revised by HMRC before and may change again β always check current HMRC/gov.uk guidance or speak to a regulated adviser before making a decision.