Making Tax Digital for Income Tax Is Here — What It Means and What You Need to Do

Short intro for the News index: Making Tax Digital for Income Tax went live on 6 April 2026, and it changes the way many self-employed people and landlords keep their records and report to HMRC. If you're in the first wave, your very first quarterly update is due on 7 August 2026. Here's a plain-English guide to who's affected, what you now have to do, and how we can take the work off your hands.

Making Tax Digital for Income Tax (MTD for IT) is the biggest change to personal tax reporting in a generation, and the first phase is now in force. For affected clients, the familiar once-a-year Self Assessment return is being replaced by digital record-keeping and four updates to HMRC each year.

We know change like this can feel daunting. The good news is that, for most of our clients, the practical impact is far smaller than the headlines suggest — particularly if your bookkeeping is already on software. This article explains the essentials and what we’d suggest you do next.

Are you affected?

From 6 April 2026, MTD for Income Tax applies to self-employed individuals and landlords whose qualifying income is more than £50,000. The threshold then steps down in later years:

  • £50,000 — from April 2026 (now live)
  • £30,000 — from April 2027
  • £20,000 — from April 2028

The point that catches people out is what “qualifying income” actually means. It’s your gross trading turnover and gross rental income — that is, before any expenses are deducted — and where you have more than one source, they are added together.

So, for example, someone with £32,000 of self-employed turnover and £20,000 of rental income has qualifying income of £52,000 and is in scope from April 2026, even though their profit is much lower. Because the test is based on income rather than profit, a fair few people are drawn in sooner than they expect. Employment income, dividends, pensions and investment income don’t count towards the threshold.

If you’re not sure where you stand, that’s exactly the kind of thing we can check for you in a couple of minutes.

What you now have to do

There are three core obligations:

  1. Keep digital records. Paper records and handwritten ledgers are no longer sufficient. Income and expenses must be recorded digitally in MTD-compatible software (or in a spreadsheet linked to HMRC via bridging software).
  2. Submit quarterly updates. Instead of one annual return, you send HMRC a summary of income and expenses four times a year.
  3. Submit a Final Declaration. After the tax year ends, a Final Declaration replaces the old Self Assessment return and pulls together everything for the year. It’s due by 31 January following the end of the tax year, as before.

Importantly, the HMRC online portal you may have used for Self Assessment cannot be used to make MTD submissions — they have to go through approved software.

Key dates to know

For the standard tax-year quarters, the update deadlines are:

  • 7 August — for the quarter to 5 July
  • 7 November — for the quarter to 5 October
  • 7 February — for the quarter to 5 January
  • 7 May — for the quarter to 5 April

If you’re in the first wave, your first quarterly update — covering 6 April to 5 July 2026 — is due by 7 August 2026. There is some flexibility to align quarters to calendar months instead; we’re happy to advise on the best fit for your business.

Penalties (and a word of caution)

MTD brings in a new points-based penalty system: you pick up one point for each late submission, and once you reach four points a £200 penalty applies.

HMRC has signalled a lighter-touch approach to late quarterly updates for those in the very first year, to allow time to adjust. That’s helpful, but please don’t read too much into it — it does not extend to late payment of tax, where interest and charges still apply, and it won’t be there for later years. Our advice is to treat the deadlines as firm from the outset and build a simple quarterly routine.

How Landi can help

This is precisely the kind of change we’re here to manage on your behalf, and as a Xero Silver Partner we can make the software side genuinely painless. Depending on what suits you, we can:

  • Check whether you’re actually within scope, and from which year
  • Register you for MTD for Income Tax (it isn’t automatic — action is required) and act as your agent
  • Get you set up on compatible software and migrate your records across
  • Handle your quarterly updates and Final Declaration, so the deadlines simply look after themselves

If you’d like us to look at your position, the sooner we start the smoother your first quarter will be. Please get in touch with your usual contact at Landi, call us on 023 9224 7440, email info@landiaccounting.com, or book a 20-minute Zoom and we’ll talk it through.

Speak to us today