Making Tax Digital for Income Tax (MTD ITSA) replaces the annual Self Assessment return for many sole traders and landlords with digital record-keeping, quarterly updates and a final declaration — all through MTD-compatible software.
Rates, thresholds and deadlines below are correct at the time of writing. HMRC and other authorities update them regularly, so confirm the current figures on the official website or with your adviser before you file or pay. This guide is general information, not tax advice.
Whether you must join depends on your qualifying income — your gross self-employment and property income, before expenses. HMRC phases MTD for Income Tax in by income level:
| Start date | Qualifying income above | Based on |
|---|---|---|
| 6 April 2026 | £50,000 | 2024/25 tax year return |
| 6 April 2027 | £30,000 | 2025/26 tax year return |
| 6 April 2028 | £20,000 | Later returns |
Limited companies are not affected, because they do not file Self Assessment for the company’s profits. Partnerships are expected to follow at a later date. Some people can be exempt, for example if it is not reasonably practicable for them to use digital tools, but they must apply to HMRC.
With standard quarters ending on 5 July, 5 October, 5 January and 5 April, each update is due one month later:
| Quarter ends | Update due |
|---|---|
| 5 July | 5 August |
| 5 October | 5 November |
| 5 January | 5 February |
| 5 April | 5 May |
You can choose calendar quarters instead (ending 30 June, 30 September, 31 December and 31 March), with updates due on the 7th of the following month.
As with MTD for VAT, HMRC uses a points-based penalty system: each late quarterly update earns a point, and reaching the threshold triggers a financial penalty. Keeping records up to date monthly makes each quarter a quick summary.
MTD for VAT and MTD for Income Tax run separately, but both need digital records and compatible software. Keeping sales and expenses in one system means the same data feeds the VAT return and the income tax updates.
Digital records that flow into MTD-ready VAT data, without re-typing.
| Step | What to do |
|---|---|
| 1. Check your income level | Add up gross self-employment and property income for the relevant tax year |
| 2. Move records off paper | Record every sale and expense digitally, with receipts attached |
| 3. Separate business and personal | Use a dedicated business bank account and reconcile it monthly |
| 4. Choose compatible software | Confirm it supports the updates you will need before your start date |
| 5. Sign up with HMRC | Register for MTD for Income Tax when your start date approaches |
Sole traders and landlords whose qualifying income is above £50,000 from April 2026, above £30,000 from April 2027 and above £20,000 from April 2028.
Gross self-employment and property income before expenses, measured for the relevant earlier tax year. It does not include other income such as employment earnings or dividends.
Four quarterly updates a year, plus a final declaration after the tax year that replaces the Self Assessment return.
No. Limited companies pay Corporation Tax and are not in MTD for Income Tax, though directors with other qualifying income may be.
No. They are separate obligations with different deadlines, but both require digital records and compatible software.