26 Aug 2025
HMRC has confirmed that 864,000 self employed workers and landlords will be pulled into the quarterly reporting rules for Making Tax Digital (MTD) for Income Tax when it comes into force.
The first phase of MTD for Income Tax will begin next April at the start of the 2026/27 tax year. It will require individuals with a qualifying income over £50,000 to file quarterly returns using software with a final year end round out.
When businesses need to start using MTD for Income Tax depends on their qualifying income within a tax year. If their qualifying income is over:
- £50,000 for the 2024/25 tax year, they will need to use it from 6 April 2026
- £30,000 for the 2025/26 tax year, they will need to use it from 6 April 2027
- £20,000 for the 2026/27 tax year, they will need to use it from 6 April 2028.
According to HMRC, around 2.9 million have a qualifying income above £20,000 and will need to join MTD for Income Tax, based on self assessment figures for 2023/24.
HMRC said: 'MTD for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC. They will need to keep digital records and every quarter, submit simple summaries of their income and expenses to HMRC using compatible software. This is expected to reduce the tax gap by reducing the scope for error and failure to take reasonable care.'