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Making Tax Digital — Everything You Need to Know

Complete guide to MTD for landlords and self-employed. Key deadlines, compatible software, and how to prepare.

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What is Making Tax Digital?

Making Tax Digital (MTD) is HMRC's flagship programme to modernise the UK tax system. It requires businesses, self-employed individuals, and landlords to keep digital records and submit tax updates to HMRC using compatible software.

MTD for VAT has been mandatory since April 2019 for VAT-registered businesses above the threshold, and since April 2022 for all VAT-registered businesses. The next major phase — MTD for Income Tax Self Assessment (MTD ITSA) — begins rolling out from April 2026.

Who Does MTD Affect?

Landlords

  • • Rental income over £50,000 — from April 2026
  • • Rental income over £30,000 — from April 2027
  • • Must file quarterly updates via MTD software

Self-Employed

  • • Self-employment income over £50,000 — from April 2026
  • • Self-employment income over £30,000 — from April 2027
  • • Digital record-keeping from day one of the tax year

Key MTD Deadlines

Live

MTD for VAT

All VAT-registered businesses must file VAT returns digitally using MTD-compatible software.

April 2026

MTD ITSA — Income over £50,000

Self-employed individuals and landlords with qualifying income above £50,000 must comply with MTD for Income Tax.

April 2027

MTD ITSA — Income over £30,000

The threshold lowers to £30,000. Significantly more landlords and sole traders will be brought into scope.

TBC

MTD for Corporation Tax

No confirmed date yet. HMRC has indicated it will not be mandated before 2026 at the earliest, and further consultation is expected.

MTD-Compatible Software

Compare the leading Making Tax Digital software options for your business.

Software Best For MTD Compatible Price From
Xero Small businesses & freelancers £13.50/mo Try Xero
FreeAgent Sole traders & contractors £14.50/mo Try FreeAgent
QuickBooks Growing businesses £12.00/mo Try QuickBooks
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Frequently Asked Questions

What is Making Tax Digital?
Making Tax Digital (MTD) is an HMRC initiative requiring businesses and landlords to keep digital records and submit tax returns using compatible software, rather than filing on paper or via the HMRC portal.
When does MTD for Income Tax start?
MTD for Income Tax Self Assessment (MTD ITSA) starts in April 2026 for self-employed individuals and landlords with qualifying income over £50,000. Those earning over £30,000 will need to comply from April 2027.
Do I need MTD software if I only have one rental property?
If your gross rental income exceeds the relevant threshold (£50,000 from April 2026, £30,000 from April 2027), you will need MTD-compatible software regardless of how many properties you own.
What happens if I do not comply with MTD?
HMRC can issue penalties for late or incorrect digital submissions. Initially there is a soft-landing period where penalties are reduced, but ultimately non-compliance can result in fines calculated on a points-based system.
Can I use spreadsheets for MTD?
You can use spreadsheets as part of your record-keeping, but you will need bridging software that connects your spreadsheet data to HMRC's systems. Standalone spreadsheets alone will not meet MTD requirements.

Related Guides

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