Making Tax Digital for Income Tax: what's changed and what's next

Making Tax Digital for Income Tax (MTD for ITSA) moved from policy to practice on 6 April 2026, when the first mandatory group — sole traders and landlords with qualifying income over £50,000 — started keeping digital records and filing quarterly updates instead of a single annual Self Assessment return.

For practices, the bigger change isn't any single deadline. It's that compliance work for affected clients is now a year-round, four-times-a-year rhythm rather than a January crunch.

Who's in scope, and when

MTD for Income Tax applies to sole traders and landlords based on "qualifying income" — gross self-employment income plus gross UK property income, before expenses or allowances. Employment income, pensions, dividends and capital gains don't count towards the threshold. The rollout is phased by income level, assessed against a prior tax year:

Partnerships aren't yet included — HMRC has said they'll join at a later, unconfirmed date. Trusts, estates and non-resident companies are exempt, as are individuals who qualify for a digital exclusion exemption.

What clients now have to do

Instead of one Self Assessment return, clients in scope now have four obligations per tax year:

• Keep digital records of income and expenses in MTD-compatible software throughout the year
• Submit a quarterly update to HMRC summarising that period's income and expenses
• Submit a Final Declaration after the tax year ends, confirming the full picture, claiming reliefs, and including non-qualifying income such as employment or dividends

For the 2026/27 tax year, the standard quarterly deadlines are:

The Final Declaration for 2026/27 is due by 31 January 2028 — the same date Self Assessment returns have always been due, just replacing the old return with an MTD submission.

The penalty position for the first year

HMRC has confirmed a "soft landing" for 2026/27: no late-submission penalty points for missed quarterly updates in the first year. Late payment penalties still apply as normal, and the points-based late-submission regime (already familiar from MTD for VAT) starts biting properly from 2027/28 onward.

What this means for capacity planning

The practical shift for practices is workload distribution, not just workload volume. Where affected clients' compliance work used to concentrate around the January Self Assessment deadline, it's now spread across four filing windows a year, each with its own reconciliation and review cycle. For a practice with a meaningful number of clients crossing the £50,000 threshold, that's a genuine change in shape — smaller peaks, more of them, all year round — worth planning capacity around rather than absorbing as extra work on top of the existing January rush.