When Does Making Tax Digital Start?

John Gates
Apr 29
2 min read

Updated: May 3

Key Dates for MTD ITSA

6 April 2026: Mandatory for sole traders and landlords with annual gross income over £50,000.

6 April 2027: Extends to those earning over £30,000.

6 April 2028: Further extension to individuals with income over £20,000.

These thresholds are based on gross income from self-employment and property before any deductions.

What Is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is an HMRC initiative aimed at modernising the UK tax system. It requires affected taxpayers to:

Maintain digital records of income and expenses.
Submit quarterly updates to HMRC using compatible software.
Provide a final declaration at the end of the tax year.

This approach aims to reduce errors and make tax administration more efficient.

How to Determine Your Qualifying Income

HMRC assesses your qualifying income based on your Self Assessment tax return:

For the 2026 start: Income reported in the 2024–25 tax return (due by 31 January 2026).
For the 2027 start: Income reported in the 2025–26 tax return (due by 31 January 2027).

If your income exceeds the relevant threshold, HMRC will notify you of your obligation to comply with MTD ITSA.

Who Is Affected?

You must comply with MTD ITSA if:

You're registered for Self Assessment.
You earn income from self-employment or property.
Your qualifying income exceeds the specified thresholds.

Certain groups may be exempt or have deferred requirements. For detailed eligibility criteria, refer to HMRC's guidance.

Preparing for MTD ITSA

To get ready:

Choose Compatible Software: Select HMRC-approved software for digital record-keeping and submissions.
Maintain Digital Records: Keep up-to-date digital records of all income and expenses.
Submit Quarterly Updates: Provide income and expense summaries every quarter.
Final Declaration: Submit a comprehensive end-of-year statement by 31 January following the tax year.

Penalties for Non-Compliance

Starting April 2026, HMRC will implement stricter penalties for late submissions and payments under MTD ITSA:

3% of the tax due if unpaid after 15 days.
An additional 3% if unpaid after 30 days.
10% annual penalty for tax unpaid beyond 31 days.

Timely compliance is crucial to avoid these penalties.

Stay Informed

HMRC will notify eligible taxpayers ahead of their required start date. However, proactive preparation ensures a smoother transition. Consider signing up for HMRC's pilot program to familiarise yourself with the process.

Making Tax Digital
for Income Tax