How tax is reported is set to change for millions across the UK with Making Tax Digital.
From April 2026, the government will begin rolling out Making Tax Digital for Income Tax – a major shift designed to modernise the Self Assessment process and help people keep clearer, more accurate financial records throughout the year. It marks the biggest change to personal tax reporting since Self Assessment was introduced over 30 years ago.
For many homeowners, landlords, self-employed individuals, or those earning extra income on the side, understanding these updates early will make for a smoother transition. This guide explains what Making Tax Digital (MTD) means, why it’s happening, and how you can prepare with confidence.
Making Tax Digital: a new digital approach to Income Tax
Making Tax Digital is HMRC’s long-term plan to move tax reporting fully online. Instead of collating everything annually for a traditional Self Assessment submission, individuals affected by the change will need to keep digital records and submit quarterly updates using HMRC-recognised software.
The aim is to reduce errors, improve accuracy and transparency, and give taxpayers a clearer, more up-to-date view of their finances. This shift also helps reduce the last-minute pressure many people face each January, creating a more manageable routine throughout the year.
Under this new system, you’ll record income and expenses digitally, submit figures to HMRC every three months via compatible software, and complete a year-end Final Declaration – replacing the existing annual Self Assessment process.
Who needs to join Making Tax Digital – and when?
MTD for Income Tax is being phased in gradually over several years. Whether you need to join – and when – depends on your gross income, meaning your total earnings from self-employment and property before expenses or allowances.
- April 2026: Individuals with qualifying income above £50,000
- April 2027: Individuals with qualifying income above £30,000
- April 2028: Individuals with qualifying income above £20,000
If you earn income from both property and self-employment, those figures are combined to determine whether you meet the qualifying income threshold. HMRC will contact eligible individuals but will not sign you up automatically – you’ll need to register yourself before your start date.
If you’ve only recently begun letting property or working for yourself, you do not need to start using MTD for Income Tax until after your first Self Assessment. However, you can choose to sign up early if you prefer.
How the new digital system will work
Once you’re required to use MTD, you’ll need to keep all relevant income and expense records digitally.
Quarterly summary updates will be submitted directly through your chosen HMRC-recognised software. These reports do not calculate tax but allow HMRC to gain a clearer understanding of what you’re earning during the year. Quarterly updates are due by the 7th day of the month following the end of the quarter.
From April 2026, the deadlines for these submissions are:
- 7th August
- 7th November
- 7th February
- 7th May
At the end of the tax year, you’ll complete a Final Declaration, which brings all income sources together, applies any allowances or adjustments, and calculates your final tax position. The deadline remains 31st January, aligning with today’s Self Assessment process.
It’s important to keep separate records for each type of income you receive. You’ll also need to send quarterly updates for each income stream individually, ensuring everything is reported accurately and on time.
What these changes mean for landlords
Making Tax Digital will apply to you if your rental income forms part of a total gross income that exceeds your relevant threshold. That includes single-property landlords, multi-property landlords, and those earning property income alongside PAYE or self-employment income. Rental income must be recorded digitally and included in your quarterly submissions and Final Declaration to HMRC.
If you’re planning to grow your portfolio, streamline your accounting, or simply gain a clearer view of your rental finances, digital record-keeping can help you stay more organised. It also makes conversations with accountants, financial planners or mortgage advisers much more straightforward.
How to stay ahead of these changes
- Check your income against the thresholds: Your most recent tax return will determine your start date. If your gross income exceeded £50,000, you’ll be included in the first phase from April 2026.
- Explore HMRC-recognised software options: There are both free and paid tools available, including bridging software for spreadsheet users. Trialling a few options early can help you find a system that feels intuitive.
- Build digital habits: Keeping records up to date throughout the year will make quarterly submissions far easier and reduce the chance of mistakes.
- Keep income sources clearly separated: If you are both a landlord and self-employed, you’ll need to report each income stream separately under MTD. Starting that organisation now will save time later.
FAQs on Making Tax Digital
Do I still need to submit a Self Assessment return?
During your transition year, yes. After that, MTD replaces the annual Self Assessment with quarterly updates and a Final Declaration.
Can I still use spreadsheets?
Yes, as long as you use bridging software that digitally links your spreadsheet to HMRC’s system.
Is MTD definitely happening in 2026?
Yes, the government has reconfirmed the April 2026 start date, with no further delays announced.
What happens if I miss a quarterly deadline?
You may face penalties similar to the current Self Assessment system, so it’s important to keep on top of updates.
Does MTD apply if I only rent out one property?
Yes, if your total qualifying income exceeds the threshold for your start date. Landlords must keep digital records and report property income quarterly.
As Making Tax Digital begins its phased rollout, staying informed and organised will make the transition far smoother. Although quarterly digital reporting may feel like a significant change, the goal is to create a clearer, more modern and more manageable way of handling your tax affairs.
