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Making Tax Digital · 6 min read

Making Tax Digital for Income Tax, explained

Who's affected, when it starts, and exactly what you'll need to do — in plain English.

Making Tax Digital (MTD) for Income Tax is the biggest change to how individuals report tax in a generation. If you're self-employed or a landlord, here's what it means for you — and how to get ready without the stress.

What is MTD for Income Tax?

MTD for Income Tax (sometimes called MTD for ITSA) changes how you report self-employment and property income to HMRC. Instead of one annual Self Assessment return, you'll keep digital records and send HMRC a summary every quarter using compatible software, followed by a final declaration after the tax year ends.

Who is affected — and when?

It's based on your qualifying income: your total gross income from self-employment and property (before expenses). It's being phased in by threshold:

  • From April 2026 — qualifying income over £50,000
  • From April 2027 — qualifying income over £30,000
  • From April 2028 — qualifying income over £20,000

Income from employment (PAYE), dividends or savings doesn't count towards the threshold. Not sure where you stand? Our free MTD eligibility checker tells you in seconds.

Tip: the threshold uses gross income, before you deduct any expenses — so it can be higher than the profit figure you're used to.

What will you actually have to do?

  • Keep digital records of your income and expenses as you go.
  • Send quarterly updates — a running summary to HMRC four times a year.
  • Submit a final declaration after year end to confirm the figures and any other income.

For most people that's roughly five submissions a year instead of one. It sounds like more work — but with the right software pulling everything together, it's actually less, because nothing piles up for a January panic.

Does it replace Self Assessment?

For your self-employment and property income, yes — the quarterly updates plus the final declaration take the place of the annual Self Assessment return.

How to get ready now

The easiest way to prepare is to start recording your income and expenses digitally today, so when the rules apply to you it's already business as usual. With Basetax you can start free, see your tax position update live, and file directly to HMRC when the time comes.

Get MTD-ready in minutes

Track your income digitally now and the 2026 switch is effortless. Free to start, no card required.

Start free →Check if MTD affects you

This guide is general information based on current HMRC rules, not personal tax advice. Ask our team about your specific situation.