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Making Tax Digital for Income Tax

Making Tax Digital (MTD) for Income Tax is set to impact sole traders and landlords. Here, we’ll provide all the key information on what MTD for IT involves, how it may affect your business or your clients, if you’re an accountant, and steps you can take to prepare for the upcoming changes.

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What is MTD for Income Tax?

Making Tax Digital for Income Tax (MTD for IT) - previously referred to as MTD for ITSA - is a government initiative that requires self-employed individuals and landlords with income over £50,000 from April 2026 (or over £30,000 from April 2027, or over £20,000 from April 2028) to keep digital records and submit quarterly updates to HMRC with the help of compatible software.

The scheme aims to make tax filing easier as well as improve accuracy, with the final tax declaration submitted at the end of the accounting period.

Why is MTD for Income Tax important for small businesses?

Knowing the changes that MTD for Income Tax brings is important. This is because it modernises the way self-employed sole traders and landlords report their income and expenses to HMRC. By requiring quarterly updates, it helps ensure that businesses stay on top of their tax obligations and avoid end-of-year surprises.

Additionally, MTD for IT aims to streamline the filing of Income Tax, in the process making it easier for businesses to manage their finances and potentially avoid costly penalties for non compliance.

Why is MTD for IT important for accountants?

Making Tax Digital rules for Income Tax are changing, so you and your clients need to be prepared. The MTD for IT testing phase is a great opportunity to make sure you’re ready ahead of the April 2026 deadline.

QuickBooks’ MTD for IT testing phase includes new, specific features to make MTD for Income Tax easier as an accountant or bookkeeper. For example, selecting quarterly or annual accounting periods, sending quarterly updates, downloading CSVs with quarterly information, retrieving calculations from HMRC and more.

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Who needs to comply with Making Tax Digital for Income Tax?

The main categories of people or organisations that need to comply with MTD for IT are businesses that are self-employed or landlords with income over £50,000 (from April 2026), over £30,000 (from April 2027) or over £20,000 (from April 2028). This includes submitting quarterly reports to HMRC, keeping digital records, and providing an end-of-year return after the end of the tax year.

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Dates and deadlines
for MTD for Income Tax

The new MTD for IT system will be mandatory starting in April 2026 for those earning above £50,000. However, from August 2026, quarterly reports must be submitted every three months, and the final tax return is due by January 31st of the following year.

April 2022

VAT-registered businesses must follow Making Tax Digital rules on their VAT return.

Find out more here

April 2024

The first open testing phase for MTD for Income Tax launches.

April 2025

The second testing phase of MTD for IT launches. Access QuickBooks’ NEW MTD for Income Tax functionality by joining our testing phase in product.

April 2026

Making Tax Digital for Income Tax will apply to self-employed businesses and landlords with annual business or property income above £50,000.

April 2027

Making Tax Digital for Income Tax applies to self-employed businesses and landlords with annual business or property income above £30,000.

April 2028

Making Tax Digital for Income Tax applies to self-employed businesses and landlords with annual business or property income above £20,000.

How to get started with Making Tax Digital for Income Tax

1

To get started with Making Tax Digital for IT, first, register with HMRC before the deadlines in April 2026, 2027 or 2028 depending on your income.

2

Next, choose the right software, either compatible software like QuickBooks or bridging software to link your spreadsheets to HMRC-approved reporting systems. If you use bridging software you must ensure your records are kept digitally and linked, as manual data transfers won’t be allowed.

3

Finally, once set up, submit your quarterly reports and end-of-year returns to HMRC to stay compliant.

Choosing the right software for Making Tax Digital

Using MTD for IT software can offer you significant benefits. For one, it’ll help you save time by automating tasks like data entry, record-keeping, and tax reporting.

At the same time, it’ll help ensure compliance with HMRC's digital requirements, and mean there’s less risk of errors and missed deadlines.

What’s more, cloud-based software like QuickBooks provides the flexibility to manage finances from anywhere, and can help ensuring your records are always up to date and accessible.

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Interested in more about MTD?

Making Tax Digital Guide

Discover more about what MTD is and its impact on businesses.

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MTD for VAT

Discover more information about MTD for VAT, current guidelines and how it could affect you.

Find out more

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Got a question about Making Tax Digital?

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Frequently asked questions

What are the changes to Making Tax Digital for Income Tax?

The main changes relating to MTD for IT are that it introduces quarterly reporting through compatible software, replacing the annual Self Assessment tax return. Starting in April 2026, it applies to self-employed individuals and landlords earning over £50,000 annually, with those earning £30,000–£50,000 joining in April 2027, and those earning £20,000-£30,000 joining in April 2028.

Businesses below the £20,000 threshold can continue using the current Self Assessment system. The changes focus on improving accuracy and streamlining tax submissions.

Is MTD only for IT?

No, Making Tax Digital (MTD) is not limited to just Income Tax (IT). The initiative also covers other tax areas, such as VAT. MTD for VAT was introduced in April 2019 and made mandatory for all VAT-registered businesses in April 2022, regardless of their turnover. Businesses must now use compatible software to keep digital records and submit VAT returns.

Future expansions of MTD are planned, although specific dates for this rollout have not been confirmed, the government is committed to extending the benefits of MTD to other tax systems.

What happens if I don’t comply with MTD?

HMRC has implemented a points-based penalty system to encourage timely submissions under Making Tax Digital (MTD). For each missed deadline, individuals or businesses receive a penalty point. Once a threshold is reached—2 points for annual, 4 for quarterly, or 5 for monthly submissions—a £200 fine is issued.

Separate points systems exist for VAT and Income Tax submissions, meaning penalties could apply to both if deadlines for each are missed. Points expire after 2 years unless the threshold is reached, in which case businesses must demonstrate good compliance over a set period to have points removed.

Late payment penalties are also being introduced, calculated based on the duration of the delay. No penalty applies if payment is made within 15 days, but delays beyond this incur escalating fines, starting at 2% after 16 days and increasing daily after 31 days.

For more information, see our blog on MTD penalties.

What digital records do businesses need to keep?

Under Making Tax Digital (MTD), businesses are required to keep accurate digital records of their financial transactions. This includes details of all business income and sales, such as the date and value of each transaction, as well as any invoices issued. Businesses must also maintain records of their expenses and retain supporting evidence like receipts or proof of purchase.

For VAT-registered businesses, additional information is required, including VAT charged on sales and paid on expenses, as well as data needed for completing VAT Returns. This includes total taxable turnover and any relevant adjustments. Businesses must also record other financial transactions, such as asset purchases or loans, that impact their accounts.

These records must be stored in MTD-compatible software or linked systems capable of submitting updates digitally to HMRC. This ensures compliance with MTD requirements.

I already keep digital records. What’s different about MTD?

Can I still use spreadsheets?

Why choose QuickBooks for Making Tax Digital?

QuickBooks is designed to help you stay MTD-compliant with minimal effort, with every QuickBooks product offering MTD for IT functionality. Seamless integration with HMRC ensures that your tax submissions are automated and accurate, eliminating the need for manual data entry. With QuickBooks, you can easily track income, expenses, and VAT, all in real-time.

Ready to make MTD compliance a breeze? Explore our plans today and start managing your business finances with ease!

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Important offers, pricing details and disclaimers

QuickBooks Making Tax Digital for VAT software is available to all QuickBooks Simple Start, Essential, Plus and Advanced subscribers. Use of QuickBooks MTD for VAT software and bridging software must be aligned with HMRC’s eligibility requirements and includes additional setup between the small business and HMRC.

QuickBooks MTD software currently supports Standard, Cash and Flat Rate schemes. QuickBooks Bridging Software supports Standard and Cash schemes. Businesses whose home currency is not GBP are currently not supported.

*Offer terms

QuickBooks Online Discount Offer Terms: Receive the discount stated above on the current monthly price for QuickBooks Online Sole Trader Plus, Simple Start, Essentials, Plus, Advanced, Payroll Core, Payroll Premium or Payroll Elite for the stated amount of months of service, starting from date of enrolment, followed by the then-current monthly price. Your account will automatically be charged on a monthly basis until you cancel. You must select the Buy Now option and you will not be eligible for a 30-day free trial. Offer valid for new QuickBooks Online customers only. No limit on the number of subscriptions ordered. You can cancel at any time by calling 0808 258 8107. Discount cannot be combined with any other QuickBooks Online offers. Terms, conditions, features, pricing, service and support are subject to change without notice. All prices shown exclude VAT.

Mobile apps: The QuickBooks Online mobile and QuickBooks Self-Employed mobile companion apps work with iPhone, iPad, and Android phones and tablets. Devices sold separately; data plan required. Not all features are available on the mobile apps and mobile browser. QuickBooks Online mobile access is included with your QuickBooks Online subscription at no additional cost. Data access is subject to cellular/internet provider network availability and occasional downtime due to system and server maintenance and events beyond your control. Product registration required.

Cancellation Terms: To cancel your QuickBooks Products subscription at any time go to Account & Settings in QuickBooks and select “Cancel.” Your QuickBooks Products cancellation will become effective at the end of the monthly billing period. You will not receive a pro-rated refund; your access and subscription benefits will continue for the remainder of the billing period.

**Products and features

Intuit Intelligence features may differ based on product. Not available with QuickBooks Sole Trader or QuickBooks Self-Employed.

Intuit Intelligence and certain other AI features are currently available at no additional cost at this time. Pricing, terms, conditions, and service options are subject to change without notice.

AI Agents (excl. VAT AI Agent): While available in all QuickBooks supported languages, the AI agent's output are currently in English-only. We recommend you review all outputs carefully.

Finance Agent: Available on QuickBooks Online Advanced only. Not available to customers with multi-currency enabled.

Beta features: Beta features have very limited availability and are subject to change. Features may be more broadly available soon.

Third party apps: Third party applications available on apps.com. Subject to additional terms, conditions, and fees.

QuickBooks Advanced Payroll: QuickBooks Advanced Payroll allows you to automatically submit information to the following pension providers: NEST, The Peoples Pension, Smart Pensions, Aviva and NOW:Pensions.

QuickBooks Payments: QuickBooks Payments allows you to access and use payment services which are provided directly to you by Adyen NV. Adyen NV is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (FRN: 779800).

Free onboarding: Free onboarding sessions are offered to all newly subscribed customers and trialists. We offer 1 session per customer and reserve the right to remove this offering at anytime. Invitations are sent via email and in-product messaging once signup has been completed. A link will be included in the message for you to book a session using our calendar tool.

Mileage tracking: Mileage tracking is available on QuickBooks Online on iOS and Android only.

VAT: Both the VAT error checker and VAT submission directly to HMRC functionality are not available in the QuickBooks Sole Trader plan.

Cash flow insights: Does not support multi-currency.

The user experience videos are for information purposes only and should not be considered legal, accounting, or tax advice or a substitute for obtaining such advice or research specific to your business. Additional information and exceptions may apply. No assurance is given that the information provided or shared in the videos are comprehensive, accurate or free of errors. Intuit does not have any responsibility for updating or revising any information presented or shared in the videos herein. Viewers should always verify statements before relying on them.

These terms apply to QuickBooks UK customers only. Bulk-pricing discount offer is valid only if you are signing up for more than one QuickBooks Online subscription with each order. View terms and conditions for multiple accounts pricing here. To inquire further about the bulk-pricing discount offer, please call 0808 304 6358.

This information is intended to outline our general product direction, but represents no obligation and should not be relied on in making a purchasing decision. Additional terms, conditions and fees may apply with certain features and functionality. Eligibility criteria may apply. Product offers, features, functionality are subject to change without notice.

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MTD for Income Tax

MTD for Income Tax

Intuit Accountant Suite

Need help choosing?

Talk to sales: 0808 168 9533

Get product support

Making Tax Digital for Income Tax

What is MTD for Income Tax?

Why is MTD for Income Tax important for small businesses?

Why is MTD for IT important for accountants?

Who needs to comply with Making Tax Digital for Income Tax?

Dates and deadlinesfor MTD for Income Tax

April 2022

April 2024

April 2025

April 2026

April 2027

April 2028

How to get started with Making Tax Digital for Income Tax

1

2

3

Choosing the right software for Making Tax Digital

Find a plan that’s right for you

Interested in more about MTD?

Making Tax Digital Guide

MTD for VAT

Get expert help from real people

Need help at any other time?

Got a question about Making Tax Digital?

Frequently asked questions

Trusted by millions of business worldwide

Stay informed and inspired

Dates and deadlines
for MTD for Income Tax