Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) requires businesses and landlords with qualifying income to maintain digital records and update HMRC each quarter using compatible software.
For individuals, MTD for ITSA will be introduced in two phases:
- from April 2026, for those with qualifying income over £50,000
- from April 2027, for those with qualifying income over £30,000
The government remains committed to the future introduction of MTD for ITSA to partnerships.
The government has announced that if your total gross income from self-employment and property is over £20,000, you’ll need to use Making Tax Digital for Income Tax in the future. They’ll set out the timeline for this at a later date.
Businesses, self-employed people and landlords will be required:
- to operate MTD from 6 April 2026 in relation to their trading and property income chargeable to Income Tax and Class 4 National Insurance contributions, if their total qualifying income from these income sources for a tax year exceeds £50,000
- to operate MTD from 6 April 2027 in relation to their trading and property income chargeable to Income Tax and Class 4 National Insurance contributions, if their total qualifying income from these income sources for a tax year exceeds £30,000
They will:
- keep their records digitally
- provide digital quarterly updates
- be able to provide their ITSA return information to HMRC through MTD compatible software
Quarterly updates
Taxpayers within MTD ITSA will need to submit a summary to HMRC of their income and expenses each quarter, fed from their digital records. These are not ‘mini tax returns’ as accounting and tax adjustments are optional. Instead, they will just represent the total of each category of income and expense that quarter.
A separate quarterly update will be needed for each trade or property business – so a sole trader who also rents out a property would have eight quarterly submissions to make each year.
By default, the quarters will follow the tax year, not the accounting period of the business. Updates must be filed by the 7th of the month following the quarter-end. So, the first quarter will run from 6 April to 5 July, and the quarterly update will need to be submitted to HMRC by 7 August.
To better align with accounting dates, taxpayers can choose to make a ‘calendar quarters election’. This would result in the first quarter running from 1 April to 30 June, the second from 1 July to 30 September and so on. The due dates for filing quarterly updates aren’t affected, so the first quarterly update is due by 7 August, the second by 7 November and so on.
Quarterly updates will be cumulative, so if an error is discovered in a previous submission, it can be corrected the following quarter.
Working out your qualifying income
Your qualifying income is the total income you get in a tax year from self-employment and property.
All other sources of income reported through Self-Assessment, such as income from employment (PAYE), a partnership or dividends (including those from your own company), do not count towards your qualifying income.
HMRC will assess your gross income (also called your turnover) before you deduct expenses.
For example, your gross income (income before you deduct expenses) could be:
- £25,000 from rental income
- £27,000 from self-employment income
In this example, your total qualifying income would be £52,000.
How HMRC will assess your qualifying income
To assess your qualifying income for a tax year, HMRC will look at the Self-Assessment tax return that you submitted in the previous tax year.
For example, to assess your qualifying income for the tax year 2026 to 2027, they’ll look at the tax return that you need to submit by 31 January 2026. This tax return is for the tax year 2024 to 2025.
You do not need to start using Making Tax Digital for Income Tax until after you submit your first Self-Assessment tax return.
After you submit your return, they’ll check if your qualifying income is more than £30,000. If it is, they’ll tell you when you must start using Making Tax Digital for Income Tax.
What’s included in your qualifying income
If you get income from a jointly owned property:
Your share of the property income will count towards your qualifying income. For example, you:
- jointly own a property with your sibling which generates £50,000 in income
- both receive an equal share
- do not have any income from self-employment
In this example, your qualifying income would be £25,000.
If you jointly own a property and only receive notice of your share of the income after expenses have been deducted, then they’ll assess that figure for your qualifying income.
How your tax residence affects your qualifying income
If you’re UK tax resident
Your qualifying income will include your:
- self-employment income
- UK and foreign property income
For example, you could:
- be a sole trader in the UK
- rent out a property in France
In this example, both income sources will contribute to your qualifying income.
If you’re not UK tax resident
Your qualifying income will include:
- UK property income
- self-employment income that you have declared in your UK Self-Assessment tax return
If you have any income from a trade of dealing in or developing UK land, this will be included. Foreign property income and income that you have not declared on your UK Self-Assessment tax return will not contribute to your qualifying income.
For example, you could:
- be tax resident in Spain
- rent out a property in the UK
- be a sole trader in Spain
In this example, only your UK property income would contribute to your qualifying income.
What will happen by 6 April 2026
- You need to submit your Self-Assessment tax return for the 2024 to 2025 tax year by 31 January 2026.
- HMRC will review your return and check if your qualifying income is more than £50,000.
- If it is, HMRC will write to you and confirm that you must start using Making Tax Digital for Income Tax by 6 April 2026. If you have an agent, they can do this on your behalf.
- You or your agent must find software that works with Making Tax Digital for Income Tax and authorise it.
- You or your agent must sign up for Making Tax Digital for Income Tax.
Who will need to use the service from 6 April 2027
You’ll need to use Making Tax Digital for Income Tax from 6 April 2027 if all of the following apply. You:
- are an individual registered for Self-Assessment
- get income from self-employment or property, or both, before 6 April 2025
- have a qualifying income of more than £30,000 in the 2025 to 2026 tax year
What will happen by 6 April 2027
- You need to submit your Self-Assessment tax return for the 2025 to 2026 tax year by 31 January 2027.
- If your qualifying income was £50,000 or less, HMRC will now review your return and check if it is more than £30,000.
- If it is, HMRC will write to you and confirm that you must start using Making Tax Digital for Income Tax by 6 April 2027.
- If you have an agent, they can do this on your behalf.
- You or your agent must find software that works with Making Tax Digital for Income Tax and authorize it.
- You or your agent must sign up for Making Tax Digital for Income Tax.
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