How Making Tax Digital Changes Income Tax Filing
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC’s programme to move Income Tax reporting from a single annual return to quarterly digital updates.[1]
Under MTD, qualifying taxpayers must:
- Keep their business and property records digitally
- Send four quarterly updates to HMRC each tax year
- Submit a Final Declaration after the tax year ends (replacing the old Self Assessment return)
MTD does not mean you pay tax quarterly. The quarterly updates are information reports only — your tax is still calculated and settled annually. The benefit is that both you and HMRC can see a more accurate, up-to-date view of your tax position throughout the year.[4]
Who Does MTD for Income Tax Affect?
MTD for Income Tax is being rolled out in phases, based on qualifying income from self-employment and UK property:[1]
| Tax Year | Income Threshold | Who It Affects |
|---|---|---|
| 2026/27 | £50,000+ | Self-employed & landlords with qualifying income at or above £50,000 |
| 2027/28 | £30,000+ | Threshold lowered to £30,000 |
| 2028/29 | £20,000+ | Threshold lowered to £20,000 |
“Qualifying income” means only self-employment and property income — not total income from all sources. Dividends, PAYE employment, pensions, and savings do not count towards the threshold.
Voluntary sign-up: Even if you’re below the threshold, you can voluntarily join MTD from April 2026. You can also leave if you’re not yet mandated.[2]
How MTD Differs from Self Assessment
Under the old Self Assessment system, you filed a single tax return each year (by 31 January). Under MTD:
- Quarterly updates replace the single annual return for self-employment and property income
- Digital records must be kept throughout the year (not just assembled at year-end)
- Compatible software is mandatory — paper returns and manual submissions are no longer accepted for MTD-mandated taxpayers
- Final Declaration confirms your full tax position at year-end, including non-MTD income (dividends, pensions, etc.)
In practice, MTD spreads the workload across the year instead of concentrating it into January. GoFile’s MTD Income Tax software handles the quarterly updates and the Final Declaration in one place.
What You Need to Get Started
To comply with MTD for Income Tax, you need:[5]
- HMRC-recognised compatible software — such as #GoFile
- A Government Gateway account — to sign up for MTD and link your software
- Digital records of your income and expenses (a spreadsheet is fine, as long as you use compatible software to submit)
Already using GoFile for VAT? You can use the same account for Income Tax. Log in or register here.
Key Dates
- April 2026: MTD goes live for taxpayers with qualifying income of £50,000+
- 7 August 2026: First quarterly update deadline (for Q1: April–June 2026)
- 31 January 2028: First Final Declaration deadline (for the 2026/27 tax year)
For full deadline details, see our MTD Income Tax Deadlines article.
Frequently Asked Questions
What is Making Tax Digital for Income Tax?
MTD for Income Tax is HMRC’s programme requiring self-employed people and landlords above certain income thresholds to keep digital records and send quarterly updates to HMRC using compatible software, replacing the single annual Self Assessment return.
When does Making Tax Digital for Income Tax start?
MTD goes live from April 2026 for those with qualifying self-employment and property income of £50,000 or more. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028.
Do I have to pay tax quarterly under MTD?
No. The quarterly updates are information reports only. Your tax is still calculated and settled annually. MTD does not change when or how you pay your tax bill.
What software do I need for Making Tax Digital?
You need HMRC-recognised compatible software that can keep digital records of income and expenses, send quarterly updates, and submit your final declaration. HMRC publishes a list of approved software on GOV.UK.
Further Reading
- How to Sign Up for MTD Income Tax — step-by-step walkthrough
- Keeping Digital Records for MTD — what HMRC expects
- Penalties, Points & Interest Charges — what happens if you miss a deadline
- MTD Income Tax: The Definitive Guide — our comprehensive single-page guide
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Sources
- Making Tax Digital for Income Tax — GOV.UK
- Sign up for Making Tax Digital for Income Tax — GOV.UK
- Income Tax: general enquiries — GOV.UK
- Overview of Making Tax Digital — GOV.UK
- Find software for Making Tax Digital for Income Tax — HMRC