From April 2026, Making Tax Digital for Income Tax (MTD for ITSA) will transform tax compliance for businesses, self-employed individuals, and landlords, mandating digital record-keeping and online submissions. Get prepared!

The mandatory signup for Making Tax Digital (MTD) for Income Tax is set to commence from April 2026. MTD for ITSA will fundamentally change the way relevant businesses, the self-employed and landlords interact with HMRC. The regime will require businesses and individuals to register, file, pay and update their information using an online tax account.

The rules will initially apply to businesses, self-employed individuals and landlords with an income of over £50,000 annually. MTD for Income Tax will then be extended to those with an income between £30,000 and £50,000 from 6 April 2027. A new system of penalties for the late filing and late payment of tax for ITSA will also apply.

It was announced as part of the recent Autumn Budget measures that MTD for Income Tax will be extended to sole traders and landlords with income over £20,000 by the end of the current Parliament. The precise timing of this change has yet to be confirmed.

HMRC states that, MTD for Income Tax is a new way of reporting income and expenses if you’re a sole trader or landlord. You’ll need to:

• use software that works with Making Tax Digital for Income Tax;
• keep digital records of your business income and expenses;
• send us quarterly updates; and
• submit a tax return and pay tax due by 31 January the following year.

If you have volunteered to test the MTD for Income Tax service then the new late submission penalties and late payment penalties will apply. If you are looking to volunteer now then you will be required to confirm that you agree that the new penalties will apply to you as part of the sign-up process.

The new penalties apply as following during the testing phase.