What is Making Tax Digital for Income Tax?

Affected taxpayers need compatible software, digital records, quarterly updates, and finalisation after the tax year. It changes the record-keeping rhythm, not the underlying need to calculate taxable profit correctly.

Software setup, bank feeds, category mapping, rental records, and quarterly review routines are easier to fix before MTD starts than during the first filing cycle.

People with qualifying income over £50,000 on their 2024/25 Self Assessment return should have started on 6 April 2026. Those over £30,000 on the 2025/26 return are due to start on 6 April 2027, and those over £20,000 on the 2026/27 return are due to start on 6 April 2028.

Qualifying income is gross self-employment turnover plus gross property income before expenses, not taxable profit. Combine those sources when testing the threshold. Other income such as employment salary and dividends is not part of that qualifying-income calculation, although it may still belong on the final tax return.

Compatible software creates digital records and sends category totals for each business or property business. The updates establish an in-year reporting rhythm, but they do not usually require every annual accounting or tax adjustment at that point.

After the tax year, the MTD return process is used to make adjustments, include other income and gains, claim reliefs and finalise the tax position. The ordinary Self Assessment payment deadline remains important; sending updates does not mean tax is automatically settled each quarter.

Income and expense records must be held digitally in compatible software or connected applications. A spreadsheet can form part of the system if it is linked through compatible bridging software where required. Re-keying totals between disconnected records weakens the process and can breach digital-link requirements that apply.

Keep invoices, receipts and other evidence as well as the digital entries. MTD changes how data is recorded and submitted; it does not remove the need to support figures or make correct tax adjustments.

Some people are automatically exempt and others can apply, including where it is not reasonable or practical to use digital tools because of age, disability, remoteness, religion or another relevant reason. An exemption is not based simply on preferring paper records or disliking software.

If you are in scope, confirm the start date with HMRC, choose compatible software, separate each income source, clean opening records and decide whether you or an agent will send updates. Test the workflow before the first deadline rather than treating the first quarter as the software setup period.