Making Tax Digital for Income Tax.
Making Tax Digital (MTD) for Income Tax is a new and more regular way of sending tax information to HMRC.
This might take time to get used to, but don’t worry. Each of the steps is quick and easy to do once you get used to doing them.
MTD isn’t a change to the whole tax system. It means you will tell HMRC about your income and expenses more regularly, using software (there’s help if you struggle with computers).
These smaller, more regular steps mean you’ll have much less to do later on, when you have to submit your tax return by the end of year deadline.
We’ll take you through what’s changing and when.
What is changing?
Using software.
When you use MTD, you’ll have to use software to record and report your income and expenses from your business or property through the year – and to complete your tax return.
You can choose from a range of software that has been approved by HMRC. These could be mobile apps for your phone or tablet, to help you keep records on the go, or software which you can log onto on a computer.
You can choose one or more bits of software to do everything, or you can choose software that connects to a spreadsheet (called “bridging software”).
Keeping Digital Records and sending quarterly updates.
You’ll use this software to keep simple digital records of your income and expenses through the year. You will usually just need to record basic details such as a date, amount and type for each entry.
This will help you to keep as up to date as you can, so that you don’t miss things or lose them.
You will then have to simply confirm this in your software every three months to show HMRC you are doing this as well as you can. This is called a quarterly update.
Submitting your tax return.
At the end of the year, everything you’ve sent will already appear in the tax return in the software, which you can change if you want to, before you complete the year-end declaration. There is no change to this deadline or to the usual need to pay by 31 January (plus payments on account by 31 January and 31 July, if applicable).
Changes to penalties.
Penalties are changing as well. They will be points-based so that you don’t get a financial penalty if you’re late once or twice. These will usually apply if you don’t send quarterly updates on time, although that won’t start until April 2027. They will also apply straight away if you’re using MTD but don’t send your tax return on time.
Who needs to use the new system and when?
If you’re self-employed or a landlord (or both) with gross income from your business and/or property over certain amounts, you may have to – by law – start using MTD now, or soon.
This is when self-employed people and landlords need to start using MTD:
- From 6 April 2026 if you have turnover above £50,000 in 2024-25
- From 6 April 2027 if you have turnover above £30,000 in 2025-26
- From 6 April 2028 if you have turnover above £20,000 in 2026-27
Turnover means total income from self-employment and property together, before you take away expenses.
You can use your tax return to calculate this by adding up:
- If you are self-employed: SA103F box 15 and box 16, SA103S box 9 and box 10 and SA200 box 3.6
- If you are a landlord: SA105 box 5 (furnished holiday lettings), box 20, box 22 (grant of lease) and box 23 (reverse premiums), SA106 box 14 (gross income: Foreign Property Income) and box 16 (reverse premiums: Foreign Property Income), and SA200 box 6.1.
What to do if you think you must use MTD now.
If HMRC has calculated that you need to start to use MTD now based on your 2024/25 Self Assessment return they will write to you.
If you have not received a letter but think that you need to use MTD this year, you should check with them.
Then you will need to:
- Choose the software you want to use
- Sign up for MTD and enter your business details
- Start to keep Digital Records in the software and send quarterly updates by following this guidance. This also explains how to complete the end-of-year declaration.
What if I don’t get a letter or can’t sign up?
If you have not received a letter from HMRC, an automatic exemption may have been applied which means you don’t have to use MTD yet. This could be temporary, such as if your income is not within the current threshold, or it may be permanent.
There is more information on the government website about MTD exemptions. If you are exempt, you may not be able to sign up for MTD and should continue to file your Self Assessment tax return as normal.
What if I can’t use a computer?
You can also apply for an exemption from MTD if you have been notified that you need to join but are not able to use a computer to keep your records. This is known as being ‘digitally excluded’.
HMRC define this as it is not being reasonable for you to use software to keep digital records or send them to HMRC. There are lots of reasons you could be digitally excluded. Find out more about digital exclusion.
You can call HMRC on 0300 200 3310 or write to them at:
Self Assessment
HM Revenue and Customs
BX9 1AS
United Kingdom
Where to find help.
If you’re struggling with MTD, don’t worry. There are places you can find help and support.
HMRC have an Extra Support Team, who help people with challenging personal circumstances, including difficulties using the phone.
We provide free, expert help for people on low incomes or who have difficult personal circumstances. Find out more about the help we offer.
Get help with Tax.
Our helpline is here for people on low incomes who can’t afford paid tax advice.
Tax information.
Get information about tax, from pensions, Self Assessment to using the right tax code.
Support us.
Find out how you can support our work to help people who are struggling with tax issues.