What is Making Tax Digital?
Making Tax Digital for Income Tax (MTD for ITSA) replaces the once-a-year rush with a quarterly rhythm. If you're in scope, you'll need to:
- Keep digital records of your business and property income and expenses, in software or in a spreadsheet linked to software.
- Send four quarterly updates to HMRC. Each is a set of category totals, from 6 April to the end of the quarter.
- Make a final declaration by 31 January after the tax year, which replaces your Self Assessment return.
Who has to use it, and when?
| Qualifying income in… | over… | start date |
|---|---|---|
| 2024/25 | £50,000 | 6 April 2026 |
| 2025/26 | £30,000 | 6 April 2027 |
| 2026/27 | £20,000 | 6 April 2028 |
Qualifying income is your gross self-employment plus property income, before expenses. Your share of jointly owned property counts; salary, pensions, and dividends don't. Once you're in, you can only leave if you're under the threshold for three tax years in a row.
What doesn't change
MTD doesn't change how much tax you pay, the expenses you can claim, or your payment dates (31 January and 31 July).
Exemptions
Some people are automatically exempt, including trustees, personal representatives, and anyone without a National Insurance number. You can apply for an exemption if you're digitally excluded, for example because of age, health, disability, or location. HMRC won't accept "I've always filed on paper" on its own. See GOV.UK exemptions.
Penalties
Each missed deadline earns a penalty point, and four points means a £200 penalty. Late payment penalties are separate, and interest is charged on top. HMRC gave first-year leniency for late quarterly updates in 2026/27; don't assume the same in 2027/28.
Questions
Do I send HMRC my receipts?
No. Quarterly updates contain category totals only. You keep the receipts and records yourself, for at least five years after the 31 January deadline.
Do I still do a Self Assessment return?
In your first MTD year you still file the previous year's return the normal way. After that, the final declaration replaces it.
Get ready properly: the MTD Starter Kit (£7.99) gives you the full Plain-English Guide and the spreadsheet that does the quarterly sums.
General information, not tax advice. Not affiliated with HMRC.