What is MTD for Income Tax Self-Assessment?

Making Tax Digital (MTD) for Income Tax is a new method for submitting a summary of your income and expenses to HMRC.

Who will MTD for Income Tax apply to?

MTD will be mandatory only for individuals who meet the specified threshold.

What are the Thresholds for MTD?

If an individual has self-employment or property income, or both, and their turnover in the 2024–25 tax year exceeds £50,000 (either jointly or separately), MTD for Income Tax will become mandatory for that individual from April 2026.

If an individual has self-employment or property income, or both, and their turnover in the 2025–26 tax year exceeds £30,000 (either jointly or separately), MTD for Income Tax will become mandatory from April 2027.

If an individual has self-employment or property income, or both, and their turnover in the 2026–27 tax year exceeds £20,000 (either jointly or separately), MTD for Income Tax will become mandatory from April 2028.

Note: These turnover calculations are based on the tax year running from 6 April to 5 April, not your business accounting period. For example, if your accounting year ends in December, you must still align your MTD reporting with the April–April tax year.

Examples for clarity:

• Example 1: If an individual’s property income is below the threshold but their self-employment income exceeds it, they will still be required to comply with MTD for Income Tax.
• Example 2: A graphic designer earning £25,000 and a landlord earning £28,000 have a combined income of £53,000, meaning MTD compliance is required from April 2026.
• Example 3: If a property generates £80,000 annually and you own 50% (£40,000), and you also earn £15,000 from self-employment, your total income is £55,000. Therefore, MTD applies from April 2026.

   What are the deadlines for submitting quarterly reports?

Under Making Tax Digital (MTD) for Income Tax, individuals required to comply must submit quarterly updates summarising their income and expenses for each period. The filing deadlines are based on the tax year (6 April – 5 April) and are as follows

Quarter	Tax quarterly period	Calendar quarterly period	Filing deadline
1	6 April – 5 July	1 April – 30 June	7 August
2	6 July – 5 October	1 July – 30 September	7 November
3	6 October – 5 January	1 October – 31 December	7 February
4	6 January – 5 April	1 January – 31 March	7 May

Who can claim an exemption from Making Tax Digital (MTD) for Income Tax?

For Making Tax Digital (MTD) for Income Tax, being digitally excluded means it is not reasonable for you to use compatible software to maintain digital records or submit them to HMRC.

Obtaining an exemption means you are not required to comply with MTD for Income Tax. You can apply for an exemption if you consider yourself digitally excluded.

The following individuals may be exempt from MTD:

1. Individuals who cannot reasonably use digital tools due to age, disability, or geographical location.
2. Individuals or communities who object to digital record-keeping for religious reasons. HMRC may grant an exemption where a taxpayer’s beliefs prohibit the storage or transmission of electronic data. These cases require a formal declaration and are considered individually.
3. Individuals who experience serious illness, technical failures, or unexpected events that prevent timely compliance. HMRC may grant temporary relief in such circumstances.

Can we join voluntarily with MTD?

Yes, if you expect that your earning will grow then you can voluntarily register with MTD before reaching the threshold.

What will be the benefit of join voluntarily with MTD?

The benefits are as follows:

1. Familiarity with digital tools before they become mandatory.
2. Fewer compliance risks when thresholds change.
3. Streamlined record-keeping from the start.

Use Our Calculator to Find Out When MTD ITSA Becomes Mandatory for You

At GM Accountants & Tax Consultants, our team of qualified accountants can support and guide you with Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) and other tax matters, at competitive and affordable prices. Please feel free to contact us for expert advice. If you are unable to visit our office, we can arrange a video call at a time that suits you. For further information, email us at admin@gmtaxconsultants.co.uk or call us on 020 3773 4123.

Disclaimer:
The information provided in this blog is for general informational purposes only and does not constitute professional accounting or tax advice. As individual circumstances may vary, readers are advised to contact us directly for advice tailored to their specific financial or tax situation.