The UK government’s Making Tax Digital for Income Tax Self Assessment (MTD ITSA) programme has been delayed again, with mandatory implementation now starting from April 2026.
MTD is one of the biggest changes to the UK tax system in decades, particularly for self-employed individuals and landlords. The delay gives taxpayers, accountants, and HMRC additional time to prepare — but it does not mean the policy has been scrapped.
This article explains what Making Tax Digital is, why it has been delayed, who will be affected, and when you need to take action.
What Is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) is a government initiative aimed at modernising the UK tax system.
Under MTD for Income Tax, affected taxpayers will be required to:
- Keep digital records of income and expenses
- Use HMRC-approved MTD software
- Submit quarterly updates to HMRC
- Submit an annual Final Declaration instead of a traditional Self Assessment return
MTD changes how and when information is reported — not how much tax you pay.
What Would Be Different Under MTD?
Currently, most self-employed individuals and landlords file one Self Assessment tax return per year.
Under MTD ITSA, this would change to:
- 4 quarterly submissions during the tax year
- 1 Final Declaration after the tax year ends
This represents a significant shift from annual reporting to near-real-time digital reporting.
Why Has Making Tax Digital Been Delayed?
The delay was introduced due to a combination of factors, including:
- Concerns about HMRC’s IT readiness
- Limited taxpayer awareness and preparedness
- The administrative burden on small businesses and landlords
- Feedback from accountants and professional bodies
- Wider economic pressures, including the cost-of-living crisis
The additional time allows HMRC, tax agents, and taxpayers to prepare properly for the transition.
What Are the New MTD Income Thresholds?
HMRC has significantly revised the original proposal.
MTD ITSA Start Dates and Thresholds
|
Start Date |
Who Is Affected |
|
6 April 2026 |
Self-employed individuals and landlords with £50,000+ gross income |
|
6 April 2027 |
Those with £30,000+ gross income |
|
Below £30,000 |
Not yet required to use MTD |
Gross income means turnover before expenses, not profit.
How Does This Affect Me?
If You Earn Under £30,000
- You are not currently required to comply with MTD for Income Tax
- You will continue filing an annual Self Assessment tax return
If You Earn Between £30,000 and £50,000
- MTD becomes mandatory from April 2027
- You will need MTD-compatible software and quarterly reporting
If You Earn Over £50,000
- MTD becomes mandatory from April 2026
- Quarterly digital submissions will be required
Who Will Be Affected by MTD ITSA?
MTD ITSA applies to:
- Self-employed sole traders
- UK landlords (including overseas landlords with UK property income)
It does not currently apply to:
- Limited companies
- Company directors (unless also self-employed or landlords)
How Many Taxpayers Are Now Affected?
Due to the revised thresholds:
- Around 850,000 taxpayers will be affected from April 2026
- This will increase to around 6 million taxpayers from April 2027
This is a significant reduction from the original estimate of 4.5 million.
Is Making Tax Digital Still Going Ahead?
Yes. Despite the delays, the government has repeatedly confirmed that Making Tax Digital will be implemented.
The phased rollout reflects a more cautious and targeted approach, rather than a change in direction.
What Should You Do Now?
Even if MTD does not apply to you yet, it’s sensible to:
- Review your income levels regularly
- Improve record-keeping processes
- Move towards digital bookkeeping where possible
- Understand how quarterly reporting will work
- Seek advice if your income is near the thresholds
Early preparation reduces disruption when MTD becomes mandatory.
Final Thoughts
The delay to Making Tax Digital for Income Tax provides welcome breathing room — but it is not a cancellation.
Self-employed individuals and landlords earning above the new thresholds should use this time to prepare, understand the new requirements, and plan ahead.
Being proactive now can help you avoid compliance issues, penalties, and last-minute stress when MTD eventually applies.
FAQs
Has Making Tax Digital been cancelled?
No. It has been delayed and re-phased, not cancelled.
Does MTD replace Self Assessment entirely?
It replaces the annual Self Assessment submission for business income, but still requires a Final Declaration.
Do expenses need to be submitted quarterly?
Yes, income and expenses are summarised in quarterly updates.
What income counts toward the threshold?
Gross self-employment and property income before expenses.
