The complete guide
Making Tax Digital for Income Tax, in plain English
Making Tax Digital for Income Tax (often shortened to MTD for Income Tax, or MTD ITSA) is the biggest change to how sole traders and landlords report to HMRC since Self Assessment began. Instead of one tax return a year, you'll keep digital records and send HMRC a short update every three months. This guide explains what it is, who has to do it, when it starts, and how to get ready — without the jargon.
When Making Tax Digital for Income Tax starts
It arrives in stages, based on your combined self-employment and property income (before expenses):
April 2026
Now liveQualifying income over £50,000
April 2027
Qualifying income over £30,000
April 2028
Qualifying income over £20,000
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is a new way of reporting self-employment and property income to HMRC. Rather than filling in a single Self Assessment tax return after the year ends, you keep your income and expenses in digital records and send HMRC four quarterly updates during the year, followed by one final declaration to confirm everything is complete.
The idea is to spread the work across the year, cut down on errors, and give you a running picture of the tax you're likely to owe — instead of a nasty surprise every January.
Who has to use MTD for Income Tax?
MTD for Income Tax applies to sole traders (self-employed) and landlords whose combined self-employment and property income is above a set threshold. It's your gross income — the total before you take off any expenses — from all your businesses and lettings added together that counts.
It's being introduced in stages, starting with higher earners and gradually bringing in more people. If you're below the current threshold you don't have to join yet, but the level drops each year, so most sole traders and landlords will be in scope by April 2028.
What you'll actually need to do
There are three parts. First, keep digital records of your income and expenses using MTD-compatible software — a spreadsheet on its own isn't enough unless it's linked to software that can file. Second, send HMRC a quarterly update: a simple summary of your income and expenses for each three-month period. Third, after the tax year ends, submit a final declaration that pulls everything together, adds any other income (like savings or employment), and confirms your final tax position — this replaces the old Self Assessment return.
What software do I need?
MTD for Income Tax can only be done through HMRC-recognised, MTD-compatible software — HMRC doesn't offer a free tool of its own for most people. The software keeps your digital records and sends your quarterly updates and final declaration straight to HMRC.
PennyPort is built specifically for this: you pop in what came in and what went out (by hand, or by importing a spreadsheet or CSV), and it sorts everything into the right boxes and files to HMRC for you — in plain English, with no accounting jargon and no bank feeds required.
The quarterly deadlines
Quarter 1
6 April – 5 July
Update due 7 August
Quarter 2
6 July – 5 October
Update due 7 November
Quarter 3
6 October – 5 January
Update due 7 February
Quarter 4
6 January – 5 April
Update due 7 May
Your final declaration is due by 31 January after the tax year ends — the same date as the old Self Assessment deadline.
Making Tax Digital for Income Tax: questions answered
What does MTD for Income Tax stand for?
MTD stands for Making Tax Digital. MTD for Income Tax — also called MTD ITSA (Income Tax Self Assessment) — is HMRC's system for sole traders and landlords to keep digital records and send quarterly updates instead of a single yearly Self Assessment return.
When does Making Tax Digital for Income Tax start?
It's rolling out in stages based on your income: from April 2026 for people with qualifying income over £50,000, from April 2027 for income over £30,000, and from April 2028 for income over £20,000.
Who has to comply with MTD for Income Tax?
Self-employed sole traders and landlords whose combined self-employment and property income (before expenses) is above the threshold for that year. Income from all your businesses and properties is added together to check whether you're over the limit.
How is my income measured for the threshold?
HMRC looks at your qualifying income — the gross total from self-employment and property before any expenses are deducted. If that combined figure is above the threshold, you're in scope.
How often do I have to file under MTD?
You send four quarterly updates during the tax year, then one final declaration after the year ends to confirm your figures and settle your tax. The quarterly updates are short summaries — the detailed check happens at the final declaration.
When are the quarterly deadlines?
Using standard quarters, the periods and deadlines are: 6 Apr–5 Jul (due 7 Aug), 6 Jul–5 Oct (due 7 Nov), 6 Oct–5 Jan (due 7 Feb), and 6 Jan–5 Apr (due 7 May). The final declaration is due by 31 January after the tax year, the same as the old Self Assessment deadline.
Do I still do a Self Assessment tax return?
Once you're in MTD for Income Tax, the quarterly updates and final declaration replace the annual Self Assessment return for your self-employment and property income. The final declaration is where you confirm the year and finalise your tax.
Do I need special software for MTD for Income Tax?
Yes. You must use HMRC-recognised, MTD-compatible software to keep digital records and file. PennyPort is built for exactly this — it keeps your records and files your quarterly updates and final declaration to HMRC for you.
What happens if I miss a deadline?
HMRC uses a points-based system for late submissions: each missed deadline earns a penalty point, and once you reach the threshold a financial penalty applies. Filing on time — which good software makes easy — keeps you clear of points.
Can I get ready before my start date?
Absolutely, and it's the smart move. Getting your records into MTD-ready software now means quarterly filing is second nature well before it becomes mandatory for you. PennyPort is free while in early access, with no card needed.
See how Making Tax Digital works for your trade