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Income Tax guidance

The essential MTD information, in manageable sections.

Start with the checker if you do not yet know whether MTD is likely to affect you. If it probably does, use this page to work through what the rules require.

Check your likely position

Who is brought into MTD?

The phased test uses gross qualifying income from personal self-employment and property, before expenses:

  • More than £50,000 in 2024 - 25: MTD from 6 April 2026
  • More than £30,000 in 2025 - 26: MTD from 6 April 2027
  • More than £20,000 in 2026 - 27: MTD from 6 April 2028

HMRC reviews the relevant Self Assessment return. Not receiving a letter does not remove the responsibility to check.

Qualifying income

Add gross income from all sole-trader businesses and your relevant share of property income. PAYE salary, dividends and an individual partner’s share of partnership profit are excluded.

CIS subcontractors should use turnover before contractor deductions. Joint landlords generally use their relevant share of property income.

Software and digital records

You or your agent must use software that supports MTD for Income Tax to create and store digital income and expense records, send quarterly updates and complete the tax return.

Spreadsheets may be usable with compatible bridging software. Supporting documents such as invoices and bank statements must still be retained.

Quarterly updates

Every three months, compatible software totals the digital records for each self-employment and property business. These summaries are quarterly updates, not complete tax returns.

Normal year-end accounting and tax adjustments do not have to be completed before an update is sent.

Sign-up and annual tax return

Check eligibility and possible exemptions before signing up. Your software should be chosen and ready. MTD for VAT does not automatically enrol you for MTD for Income Tax.

You still submit an annual tax return and pay tax by the usual deadline, but the return is completed through compatible software.

Exemptions and special circumstances

Some exemptions are automatic; others must be applied for. Digital exclusion may include circumstances involving age, disability, remoteness, religion or another practical barrier.

New entrants do not start MTD until after submitting their first Self Assessment return. Farming, complex property and unusual income arrangements may justify closer review.

Penalties and the first mandatory year

HMRC says it will not apply penalty points for late quarterly updates for the 2026 - 27 tax year. The updates are still required and must be sent before the corresponding tax return can be submitted. Late-return and late-payment rules continue to matter.

This is latitude, not a reason to ignore the process. Establishing software, digital records and a quarterly routine early should make later years easier.