If you're self-employed or you let out property, the way you report income to HMRC is changing. Making Tax Digital for Income Tax (often shortened to MTD for Income Tax, or MTD ITSA) replaces the once-a-year Self Assessment routine with digital record-keeping and updates sent every quarter.
The first wave is mandatory from 6 April 2026. Whether you're caught in that wave, the next one, or the one after depends on a single number: your qualifying income.
This guide sets out the full rollout timeline, explains exactly who is in scope and when, and shows you what the new quarterly rhythm looks like in practice. It's written for sole traders and landlords who want a plain answer to "does this apply to me, and what do I actually have to do?"
What is Making Tax Digital for Income Tax?
Making Tax Digital is HMRC's long-running plan to move tax reporting online. It already applies to VAT, where every VAT-registered business keeps digital records and files returns through compatible software.
MTD for Income Tax extends the same idea to income from self-employment and property. Instead of pulling your figures together once a year for a Self Assessment return, you'll do three things.
First, you keep digital records of your business and property income and expenses as you go. Second, you send HMRC a short summary every quarter using MTD-compatible software. Third, after the tax year ends, you finalise your figures and submit a final declaration that pulls everything together.
It's worth being clear about what MTD does not change. It doesn't change how much tax you pay, the rates you pay it at, or the rules on what's allowable. It changes the plumbing, not the bill.
Who has to use MTD for Income Tax, and when?
You'll need to use MTD for Income Tax if you're a sole trader or a landlord registered for Self Assessment whose qualifying income is above the threshold for that phase.
The rollout is phased, with the income threshold stepping down each time. Crucially, HMRC looks at your qualifying income in an earlier "test" tax year to decide whether you're caught from the start date.
| Phase | Mandatory from | Qualifying income over | Income tax year tested |
|---|---|---|---|
| Phase 1 | 6 April 2026 | £50,000 | 2024/25 |
| Phase 2 | 6 April 2027 | £30,000 | 2025/26 |
| Phase 3 | 6 April 2028 | £20,000 | 2026/27 |
The thresholds and dates above are taken from HMRC's guidance on when to sign up (gov.uk).
So the figures on your 2024/25 Self Assessment return are what decide whether you join in April 2026. If your qualifying income from self-employment and property combined was over £50,000 for 2024/25, you're in the first wave. HMRC writes to affected taxpayers, but you shouldn't wait for a letter to start preparing.
One sensible point in the rules: you don't start using MTD for Income Tax until after you've submitted the Self Assessment return that confirms you're over the threshold. The test year's return comes first, then MTD begins.
What counts as qualifying income?
This is where a lot of confusion creeps in, so it's worth slowing down.
Qualifying income is your gross income, before expenses, from two sources only:
- your total self-employment turnover (your trading receipts), and
- your total UK property income (your gross rents).
HMRC assesses the income before you deduct any expenses (gov.uk). That catches people out, because a landlord might have modest profit after mortgage interest and repairs but still sail over the threshold on gross rent alone.
You add the two sources together. A sole trader with £35,000 of turnover and £20,000 of gross rents has £55,000 of qualifying income, even though neither source breaches £50,000 on its own.
Just as important is what does not count. Income from employment (PAYE), your share of profit from a partnership, dividends, the State Pension and private pensions are all excluded from the qualifying income figure (gov.uk). A landlord with a £60,000 salary and £8,000 of gross rent is nowhere near the threshold on qualifying income, because the salary doesn't count towards it.
What will you actually have to do each year?
Once you're in MTD for Income Tax, the year takes on a steady rhythm. There are three moving parts.
Keep digital records
You record each item of business and property income and expense digitally, using MTD-compatible software. A shoebox of receipts and a spreadsheet typed up in January no longer does the job.
Send quarterly updates
Four times a year, you send HMRC a running summary of your income and expenses for each business and property source. These are estimates, not final figures, so you don't need every adjustment nailed down at that point.
The standard quarterly periods and deadlines are set out by HMRC as follows (gov.uk).
| Quarter | Period covered | Submission deadline |
|---|---|---|
| 1 | 6 April to 5 July | 7 August |
| 2 | 6 July to 5 October | 7 November |
| 3 | 6 October to 5 January | 7 February |
| 4 | 6 January to 5 April | 7 May |
Make a final declaration
After the tax year ends, you bring everything together. You make any accounting adjustments, add other income that sits outside MTD (such as employment or dividends), claim reliefs and allowances, and submit a final declaration that confirms your figures. This replaces the old Self Assessment tax return for that income, and your tax is calculated from it.
The Self Assessment payment dates don't change. The balancing payment for a tax year is still due by 31 January after it ends, with payments on account on 31 January and 31 July where they apply (gov.uk). MTD changes how you report through the year, not when you settle up.
Illustrative example: when does Sam get pulled in?
Illustrative example. Sam is a self-employed graphic designer who also lets out one flat. The numbers below are made up to show how the threshold test works; they are not a real client.
For the 2024/25 tax year, Sam's accounts show:
- self-employment turnover (gross, before expenses): £41,000
- gross rent from the flat (before mortgage interest and repairs): £12,000
Sam's qualifying income for 2024/25 is £41,000 + £12,000 = £53,000.
That's above the £50,000 Phase 1 threshold, so once Sam has filed the 2024/25 Self Assessment return, Sam must use MTD for Income Tax from 6 April 2026.
Notice what didn't matter here. Sam's actual taxable profit after expenses might be well under £50,000. The test is on gross income, not profit, which is why Sam is caught.
If, instead, Sam's gross rent had been £6,000 and turnover £41,000, qualifying income would be £47,000. Sam would not be in Phase 1, but would need to watch the lower thresholds: £30,000 from April 2027 and £20,000 from April 2028 would both catch Sam on those figures.
Which start date applies to me? A quick decision guide
Work through these steps with your gross figures to hand.
- Add up your qualifying income. Take your total self-employment turnover plus your total gross UK property income for the relevant test year. Ignore salary, pensions, dividends and partnership profit shares.
- Check the £50,000 line for 2024/25. If your 2024/25 qualifying income was over £50,000, you're in Phase 1 and must start from 6 April 2026.
- If not, check the £30,000 line for 2025/26. If your 2025/26 qualifying income is over £30,000, you join in Phase 2 from 6 April 2027.
- If still not, check the £20,000 line for 2026/27. If your 2026/27 qualifying income is over £20,000, you join in Phase 3 from 6 April 2028.
- Below £20,000 on all three tests? You're not currently mandated. Carry on with normal Self Assessment, but keep an eye on your turnover and rents, because growth can push you over a line.
If you're a sole trader weighing up your wider obligations, our guide for sole traders covers how MTD fits alongside the rest of your tax year. Landlords can find property-specific support on our landlords page.
Are there any exemptions?
Yes, but they're narrow. HMRC allows exemptions in limited circumstances, for example where it isn't reasonably practical for you to use digital tools because of age, disability, location (such as no reliable internet) or another valid reason. This is broadly the "digitally excluded" category. You have to apply, and HMRC decides (gov.uk).
Being below the income threshold isn't an exemption as such. It simply means you're not mandated yet. If your qualifying income later rises above the relevant threshold in a test year, you'll be brought in.
What should you do now to get ready?
Even if your start date is 2027 or 2028, the businesses that find MTD painless are the ones that move early. A few practical steps.
Get your record-keeping digital now. Moving from spreadsheets or paper to proper software is the single biggest change, and it's far easier to bed in during a quiet period than under a quarterly deadline.
Separate your sources cleanly. Self-employment and each property need to be tracked distinctly, because quarterly updates are submitted per source.
Know your numbers. If you're close to a threshold, work out your gross qualifying income for the test year so there are no surprises about which phase you fall into.
This is exactly the kind of changeover where a bit of help up front saves a lot of friction later. Our bookkeeping services get your records MTD-ready, and our Self Assessment service handles the quarterly updates and final declaration so you don't have to.
Not sure which MTD phase you're in? Book a free 20-minute call with a Zmartly accountant. We'll check your qualifying income, confirm your start date, and set you up with compatible software before the deadline bites. Talk to a Zmartly accountant.
Frequently asked questions
When does Making Tax Digital for Income Tax start?
It starts on 6 April 2026 for sole traders and landlords whose qualifying income for 2024/25 was over £50,000. The threshold then drops to £30,000 from 6 April 2027 (tested on 2025/26 income) and £20,000 from 6 April 2028 (tested on 2026/27 income).
Does MTD for Income Tax replace my Self Assessment tax return?
For your self-employment and property income, yes. Once you're in MTD you send quarterly updates and then a final declaration instead of the usual once-a-year return for that income. Your other income and any reliefs are pulled into the final declaration. Self Assessment payment dates, such as the 31 January balancing payment, don't change.
Is the threshold based on profit or turnover?
Turnover. Qualifying income is your gross income before expenses, combining your total self-employment turnover and your total gross UK property rents. A landlord can be over the threshold on gross rent even if profit after mortgage interest and repairs is small.
Does my salary or pension count towards the threshold?
No. Employment income, the State Pension, private pensions, dividends and partnership profit shares are all excluded from qualifying income. Only self-employment turnover and gross UK property income count.
How often do I have to report under MTD for Income Tax?
Four quarterly updates a year, with standard deadlines of 7 August, 7 November, 7 February and 7 May, followed by a final declaration after the tax year ends.
Can I get an exemption?
Possibly, if it isn't reasonably practical for you to use digital tools, for example because of age, disability or lack of reliable internet access. You apply to HMRC and they decide. Being below the income threshold isn't an exemption; it just means you're not mandated yet.
