Making Tax Digital (MTD) starts on 6 April 2026 for self-employed individuals and landlords with qualifying annual income over £50,000. There are a number of issues to bear in mind.
As for all tax obligations, penalties will be charged for late submissions and payments. However, to ease the transition, no penalties will be charged for late quarterly updates during the first year – 2026/27.
The relaxation, however, will only affect the quarterly updates; late submission of the digital yearly submission due by 31 January 2027 could still attract penalties. And these penalties will be increased from April 2017 as will late payment penalties.
Whether, and when, you have to join MTD depends on your qualifying income from selfemployment and property letting. That income is taken from the tax return that was due for submission by the previous 31 January. So if your 2024/25 tax return, due by 31 January 2026, shows qualifying income of more than £50,000, you will have to use MTD from 6 April 2026. That threshold will fall to £30,000 from 6 April 2027 and £20,000 from April 2028.
Business cessations may cause some uncertainty. HMRC has said that if a business ceases in 2024/25 it will not have to join MTD, but its income will still count towards the owner’s qualifying income, for example where the taxpayer has a property business as well.
Unincorporated businesses and landlords within MTD will have to report quarterly to HMRC the totals of their income and expenses for each source of income. In general the quarters will end on 5 July, 5 October, 5 January and 5 April and reports will have to be submitted by the 7th day of the month following the end of the quarter. A final declaration must be made by 31 January following the year end and must include any accounting adjustments as well as other income and claims.
