Making Tax Digital for Income Tax
MTD IT: What small business owners and landlords need to know
WHAT IS MTD FOR INCOME TAX?
Making Tax Digital for Income Tax (MTD IT) changes how self-employed individuals and landlords report income to HMRC. Instead of one annual tax return, you will submit quarterly updates throughout the year using compatible software, plus a final tax return.
WHO DOES THIS APPLY TO?
MTD IT applies based on your most recently submitted tax return and your combined income from self-employment and property. These thresholds relate to income, not profit.
From April 2026 if your 2024/25 tax return shows income over £50,000
From April 2027 if your 2025/26 tax return shows income over £30,000
From April 2028 if your 2026/27 tax return shows income over £20,000
This includes all landlords with rental income, even where the rental property is outside the UK.
WHAT WILL YOU NEED TO DO?
Each year you will submit:
4 quarterly updates
1 final end-of-year declaration
All submissions must be made digitally using MTD-compatible software some of which are spreadsheet based.
WHEN ARE THE DEADLINES?
Quarterly updates are due one month plus 7 days after the quarter ends:
7 August
7 November
7 February
7 May
The final declaration is due by 31 January following the end of the tax year.
WILL THIS CHANGE WHEN I PAY TAX?
No. Tax payment dates remain the same.
Quarterly updates do not create tax bills, but HMRC will use them to provide a live estimate of the tax that may be due.
If you also receive PAYE income, HMRC may adjust your tax code to collect tax more evenly. The final position is still confirmed at year end.
DO I NEED NEW SOFTWARE?
Yes. MTD requires digital records using compatible software.
Most software uses secure bank feeds to automatically pull transactions from your bank account, reducing admin and errors.
WHAT SHOULD I DO NOW?
Start preparing early.
Good systems and clear processes make MTD far less stressful.
