Making Tax Digital for Income Tax: The First Deadline is Fast Approaching

With the introduction of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), the biggest change to the Self Assessment system in a generation is now underway. 

Although the mandatory start date of April 2026 has arrived for the first group of taxpayers, many self-employed individuals and landlords are still unprepared for the new requirements. Now is the time to check whether the rules apply to you and, if they do, ensure you have the right systems in place.

What is Making Tax Digital for Income Tax? 

Making Tax Digital (MTD) is HM Revenue and Customs’ (HMRC) programme to modernise the tax system by requiring taxpayers to keep digital records and submit information electronically using compatible software. 

Instead of submitting just one annual Self Assessment tax return, taxpayers within MTD will need to:

• Keep digital records of income and expenses.
• Send quarterly updates to HMRC through MTD-compatible software.
• Submit a year-end final declaration to confirm their tax position.

The aim is to reduce errors, improve record keeping and help individuals keep track of their tax obligations throughout the year.

Who Needs to Comply? 

The rollout is being introduced in stages. 

From April 2026, MTD for Income Tax is mandatory for sole traders and landlords with combined gross income from self-employment and property of more than £50,000. 

The threshold then falls to: 

• More than £30,000 from April 2027.
• More than £20,000 from April 2028.

Importantly, it is your gross income (turnover before expenses), not profit, that determines whether you fall within the rules. 

The First Reporting Deadline is Approaching 

For those now within MTD for Income Tax, the first quarterly reporting period runs from 6 April 2026 to 5 July 2026. 

The first quarterly update must be submitted to HMRC by 7 August 2026. 

While HMRC has confirmed that late filing penalty points will not be charged for missed quarterly updates during the first year of mandation, businesses should not view this as a reason to delay. The first year provides an important opportunity to become familiar with the new system and establish good habits before penalties begin to apply. 

Many Taxpayers Remain Unprepared 

Despite years of advance notice, research suggests that many affected taxpayers are not yet ready for the change. 

Recent studies found:

• Nearly 70% of sole traders were unaware of the new digital filing requirements.
• Around 40% of those who were aware had not yet taken any action to prepare.
• One in three sole traders still rely on paper-based record keeping.
• Around 20% of self-employed individuals had taken no steps towards compliance as the deadline approached.

These figures highlight the importance of acting early, particularly for businesses that currently rely on spreadsheets, paper records or annual bookkeeping processes. 

What Should Businesses Do Now? 

If you think MTD for Income Tax may apply to you, there are several steps you should take:

1. Check whether you are affected  

Review your 2024/25 Self Assessment return. If your combined income from self-employment and property exceeded £50,000, you are likely to fall within the first phase. 

2. Choose compatible software 

MTD requires digital record keeping and submissions through compatible software. Many accounting packages already support MTD, while there are also lower-cost options designed specifically for sole traders and landlords. 

3. Review your bookkeeping processes 

Moving to quarterly reporting means records need to be kept up to date throughout the year. Businesses that currently update accounts annually may need to change their approach. 

4. Speak to you accountant or adviser 

Professional advice can help you understand your obligations, select suitable software, and ensure you are ready for future submissions. 

Don’t leave it until the last minute, there’s still time  

Making Tax Digital for Income Tax represents a significant shift in how many self-employed individuals and landlords manage their tax affairs. 

Although the first mandatory group has already entered the regime, there is still time to prepare for the first quarterly submission deadline. Businesses that act now will find the transition far smoother than those who wait until deadlines are imminent. 

Hayley Thompson is the Founder and Director of Lintons Accountants Malton. Hayley is an ATT-qualified tax professional with a BA (Hons) in Accounting and Finance. With a blend of tax expertise,

compliance knowledge, and hands-on business experience, she is passionate about helping clients stay compliant while making informed financial decisions.

She specialises in providing practical, jargon-free guidance that supports both business growth and peace of mind.