Making Tax Digital for Income Tax will be Applicable from 6 April 2026
13/02/2025 - 12 minutes readMTD for Income Tax will be applicable from 6 April 2026 if all of the following apply.
You:
- – are an individual registered for Self Assessment
- – get income from self-employment or property, or both, before 6 April 2025
- – have a qualifying income of more than £50,000 in the 2024 to 2025 tax year
MTD for Income Tax will be applicable from 6 April 2027 if all of the following apply.
You:
- – are an individual registered for Self Assessment
- – get income from self-employment or property, or both, before 6 April 2025
- – have a qualifying income of more than £30,000 in the 2025 to 2026 tax year
What will happen by 6 April 2027
- You need to submit your Self Assessment tax return for the 2025 to 2026 tax year by 31 January 2027.
- If your qualifying income was £50,000 or less, HMRC will review your return and check if it is more than £30,000.
- If it is, HMRC will write to you and confirm that you must start using Making Tax Digital for Income Tax by 6 April 2027. If you have an agent, they can do this on your behalf.
- You or your agent must find software that works with Making Tax Digital for Income Tax and authorise it.
- You or your agent must sign up for Making Tax Digital for Income Tax.
Who will not need to use it?
If you are exempt or choose not to sign up voluntarily during the testing period, you must continue to report your income and gains in a Self Assessment tax return.
If you meet certain conditions, you may be automatically exempt from using Making Tax Digital for Income Tax. If you are automatically exempt, you do not need to apply for an exemption.
When you need to apply for an exemption
If you are not automatically exempt, you may be able to apply for an exemption when the application process opens. You’ll need to show that it’s not reasonable or practical for you to use software to keep digital records and submit them.
Who is automatically exempt
You’re automatically exempt and cannot sign up for Making Tax Digital if you are a:
- – trustee, including a charitable trustee or a trustee of non-registered pension schemes
- – person that does not have a National Insurance number — this only applies for a tax year where you do not have a National Insurance number on 31 January before the start of that tax year
- – personal representative of someone who has died
- – Lloyd’s member, in relation to your underwriting business
- – non-resident company
If you are automatically exempt, you will not need to apply for an exemption.
What do you need to do?
A relevant person within charge to income tax under Part 2 of the Income Tax (Trading and other Income) Act 2005 (ITTOIA 2005)
A relevant person with trading income must provide the following update information in each quarterly update:
- – quarterly update period start date
- – quarterly update period end date
- – totals of the amounts falling within income and expenses set out in the following table
| Business income | Business expenses (allowable and disallowable) |
|---|---|
| Turnover | Cost of goods bought for resale or goods used |
| Other business income | Construction industry — payments to subcontractors |
| Wages, salaries, and other staff costs | |
| Car, van, and travel expenses | |
| Rent, rates, power, and insurance costs | |
| Repairs and maintenance of property and equipment | |
| Phone, fax, stationery, and other office costs | |
| Advertising | |
| Business entertainment costs | |
| Interest on bank and other loans | |
| Bank, credit card and other financial charges | |
| Accountancy, legal and other professional fees | |
| Other business expenses |
A relevant person with property income and profits of which are chargeable to income tax under Part 3 of ITTOIA 2005 (property income)
A relevant person with property income must provide the following update information in each quarterly update period:
- – quarterly update period start date
- – quarterly update period end date
- – totals of the amounts falling within property income and expenses set out in the following tables
UK property
| Property income | Property expenses (allowable and disallowable) |
|---|---|
| Total rent | Rent, rates, insurance and ground rents |
| Other income from property | Property repairs and maintenance |
| Premiums for the grant of a lease | Non-residential property finance costs |
| Reverse premiums and inducements | Residential property finance costs |
| Residential finance costs brought forward | |
| Legal, management and other professional fees | |
| Costs of services provided, including wages | |
| Travel expenses | |
| Other allowable property expenses |
Foreign property
| Foreign property income | Foreign property expenses (allowable and disallowable) |
|---|---|
| Total rents | Rent, rates, insurance and ground rents |
| Other income from property | Property repairs and maintenance |
| Premiums for the grant of a lease | Non-residential property finance costs |
| Residential property finance costs | |
| Unused residential property finance costs brought forward | |
| Legal, management and other professional fees | |
| Costs of services provided, including wages | |
| Travel expenses | |
| Other allowable property expenses |
A relevant person with property income and profits from a jointly let property which are chargeable to income tax under Part 3 of ITTOIA 2005 (property income)
A relevant person that lets property jointly must provide the following update information in each quarterly update period:
- – quarterly update period start date
- – quarterly update period end date
They must choose how to provide the following update information. They can either provide:
- – totals of the amounts falling within property income and expenses set out in the tables in sections 2.1 or 2.2 of this notice
- – totals of the amounts falling within property income set out in the tables in sections 3.1 or 3.2 of this notice
UK property
| Property income |
|---|
| Total rent |
| Other income from property |
| Premiums for the grant of a lease |
| Reverse premiums and inducements |
Foreign property
| Property income |
|---|
| Total rent |
| Other income from property |
| Premiums for the grant of a lease |
Making Tax Digital for Income Tax will be applicable from 6 April 2026 & relevant persons with jointly let property can make use of either easement independently (and where they choose to report only income, not expenses, they are an ‘eligible person’ in this notice).
This notice is made further to regulation 6 of The Income Tax (Digital Requirements) Regulations 2021 as amended. The paragraph on retail sales is made under regulation 6(3).
An eligible person:
- – in relation only to their share of income that arises from properties they let jointly, can create one digital record (a single entry) for each category (as set out in sections 3.1 and 3.2 of the Making Tax Digital for Income Tax update notice) of property income that was received during a quarterly update period
- – in relation only to their share of expenses that arise from properties they let jointly can create one digital record (a single entry) for each category (as set out in sections 2.1 and 2.2 of the Making Tax Digital for Income Tax update notice) of property expense that was incurred during a tax year
This notice does not apply to a joint property owner who decides not to create digital records as set out above.
Turnover below the VAT registration threshold
A relevant person with an annual turnover from either self-employment or property that is below the VAT registration threshold, may choose to categorise their digital records of income and expenses in less detail.
For each relevant source of income, they can categorise digital records as either income or an expense, instead of using the more detailed categories listed in the Making Tax Digital for Income Tax update notice. This will mean they send figures for total income and total expenses, for each relevant income source, in their update information.
A relevant person that lets property jointly and meets the criteria above can also choose to categorise their records in this way.
Where a relevant person receives property income and incurs residential property finance costs (such as mortgage interest), they must create a separate digital record for these costs and send them separately from other expenses, in their update information.
More information is available about the restriction on finance cost relief for individual landlords.
Retail sales
A relevant person may choose in respect of each tax year that the digital records in relation to the retail sales of that business are those specified in this section.
In respect of the retail sales of the business of a retailer, digital records mean a single digital record of the daily gross takings for any retail sales made.
The gross daily retail sales digital record must include:
- – all payments as they are received by the relevant person or on the relevant person’s behalf, from its own cash-paying retail consumers — this includes payments by cheque, debit or credit card, maestro, visa or similar electronic transactions and electronic cash
- – the full value of all credit or other non-cash retail sales received by the relevant person or on the relevant person’s behalf — this includes the full value of credit sales, the cash value of payment in kind for retail sales, the face value of gift, book and record vouchers received and any other payments for retail sales, including those sales completed via third-party online sales platforms
The following should be excluded when calculating the amount of daily gross takings:
- – counterfeit notes
- – illegible credit card transactions
- – inadvertent acceptance of foreign currency (where discovered after their acceptance)
- – inadvertent acceptance of out-of-date coupons which are not honoured by promoters
- – instalments in respect of credit sales
- – refunds to a consumer for overcharges or faulty or unsuitable goods
- – float discrepancies
- – unsigned or dishonoured cheques from cash customers
- – use of training tills
- – void transactions
- – any other income that is not included in the gross daily retail sales digital record
Guidance is available on keeping digital records and submitting quarterly updates as part of Making Tax Digital for Income Tax.
How can MCL Accountants help with your queries on Making Tax Digital for Income Tax will be applicable from 6 April 2026?
Contact MCL Accountants on 01702 593 029 if you would like us to answer your queries on Making Tax Digital for Income Tax will be applicable from 6 April 2026 or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.
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Ishan provides financial management, taxation and transactional advice to business entities of all sizes. His expert areas include statutory compliance, business taxation, personal tax & transactional processing and systems. Industry sectors include professional services, retail, hospitality and entertaining & media and advertising services.
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