MAKING TAX DIGITAL FOR INCOME TAX (MTD IT)
MTD IT is a complete replacement for the current Self-Assessment scheme for Sole Traders and Landlords with personally owned property income.
Instead of a single annual Self-Assessment Tax return, MTD IT will require all who qualify to submit Quarterly “simple” returns of income and expenditure plus a final submission of adjustments using approved digital software only. Paper returns will be discontinued.
Formerly known as MTD ITSA (Income Tax Self-Assessment), MTD IT has been on the agenda from HMRC for a number of years. It has been postponed, trialled and changed a number of times during the last 4 years. However. In the October 2024 budget, the government mandated that MTD IT would be introduced for the financial year 6th April 2026 – 5th April 2027.
The first quarterly return for the period 6 April 26 to 5 July 26 will be due for filing on 7th August 2026.
Currently Announced Limits and Timescales
HMRC have said that the first tranche of MTD IT will be all Sole Traders and Landlords with personally owned rental or investment property income whose COMBINED Turnover for a year is £50k or over.
TURNOVER is total gross qualifying income (NOT just profit)
If you fall into this category, you will be told to register for MTD IT for the Financial Year 6th April 2026 – 5th April 2027. We can register you for MTD IT on your behalf.
Your Self-Assessment Tax return for the current financial year 6th April 2024 – 5th April 2025 will determine if you will be required to register. Following this, the turnover limits will be lowered to bring more individuals into the scheme.
| Financial Year | Combined Turnover (gross qualifying income) | Enrolment/Returns |
| 6th April 2023 – 5th April 2024 | n/a | Last Financial Year – Self-Assessment Tax Return filed by 31st January 2025 If your combined turnover in this financial year was at, around or over £50k, you will receive a letter from HMRC during April – June 25 informing you that you are “Likely” to qualify for the first tranche of MTD IT. |
| 6th April 2024 – 5th April 2025 | n/a £50k or over | Current Financial Year – Self-Assessment Tax Return to be submitted by 31st January 2026 Transition and Qualifying Year If your combined turnover in this financial year is at, around or over £50k, you will receive a letter from HMRC following 31st January 2026 telling you that you will need to register for MTD IT and begin Quarterly Returns from 6th April 2026. |
| 6th April 2025 – 5th April 2026 | £50k or over £30k or over | From 6th April 2026 – Register for MTD IT. Quarterly + Final Submissions begin Transition and Qualifying Year If your combined turnover in this financial year is at, around or over £50k, you will receive a letter from HMRC following 31st January 2027 telling you that you will need to register for MTD IT and begin Quarterly Returns from 6th April 2027. |
| 6th April 2026 – 5th April 2027 | £50k or over £30k or over | Quarterly + Final Submissions continue From 6th April 2027 – Register for MTD IT. Quarterly + Final Submissions begin Digital Software required for returns |
| Thereafter but no fixed date yet announced | £20k or over | Enrolled into MTD IT. Quarterly + Final Submissions begin Digital Software required for returns |
When will I know if I will need to register for MTD IT?
HMRC have written to accountants and bookkeepers, informing them that the clients for whom they act and who are “likely” to be included in the first tranche of MTD IT will receive a letter in the coming months.
We strongly suggest booking a call with your accountant or bookkeeper to discuss this at your earliest convenience.
Are there any exemptions?
MTD IT will not apply to individuals whose income is from PAYE employment, limited company dividends, investments, savings and pensions only.
At this time, Partnerships (LLPs) are also exempt.
Jointly owned personal investment/rental property is, however, in scope but HMRC have announced easements for reporting categories of jointly owned property. More to come on this.
Can I opt out?
At this time, HMRC have indicated that registration is mandatory with very few exceptions. Partnerships are currently exempt.
What if I earn over £50k in FY 25/26 but fall below the limit in subsequent years?
HMRC have announced that they require 3 years of submissions below the required limit before they will allow an individual to un-enrol. Since the limits are being lowered each year, it will become more difficult to un-enrol.
The practicalities of quarterly returns
Sole Traders and Landlords with personally owned investment/rental income who are registered for MTD IT will be required to make what HMRC term as “simple quarterly return” for EACH INCOME STREAM plus “a final submission with adjustments”.
The annual timetable for submissions is shown below.
| Quarter | Filing Deadline | Payment Due? | Penalties for Late Filing/Payment? |
| Quarterly update 1: Period covered: 6 April to 5 July | 5th August | No | Late Filing |
| Quarterly update 2: Period covered: 6 July to 5 October | 5th November | No | Late Filing |
| Quarterly update 3: Period covered: 6 October to 5 January | 5th February | No | Late Filing |
| Quarterly update 4: Period covered: 6 January to 5 April | 5th May | No | Late Filing |
| Final Declaration: This is where you need to disclose other forms of income, such as investment or savings, and submit any claims for relief. | 31 January, + payment. | Yes | Late Filing and Late Payment |
The first quarterly return for the 6th April 26 – 5th July 26 will be due for filing on 5th August 2026
NOTE: If MTD IT customers are earning any type of income in addition to their self-employment and property income, they must report that to HMRC just as they would in their Self-Assessment return.
An example of how this works is shown in the diagram below:
