HMRC’s phased introduction of Making Tax Digital (MTD) for Income Tax Self-Assessment represents a significant shift in how self-employed individuals and landlords will be required to maintain and submit their tax information. With the first stage coming into effect from 6 April 2026, it is essential to understand how the changes may affect you and what steps you may need to take.
Below, we outline the key requirements, timelines and practical considerations to help you prepare.
Who will be affected by MTD requirements and when?
From 6 April 2026, MTD for Income Tax will become mandatory for:
- Self-employed individuals, and
- Landlords
with combined gross income (before expenses) exceeding £50,000, based on figures reported on their 2024/25 tax returns.
The thresholds will then reduce as follows:
- From 6 April 2027: over £30,000, based on 2025/26 returns
- From 6 April 2028: over £20,000, based on 2026/27 returns
If you have both trading and property income, HMRC will look at the combined total of these income streams.
At present, partnerships and partnership income are not included within MTD for Income Tax.
Notification from HMRC
HMRC should have written to all affected individuals following the submission of the 2024/25 tax return that have been filed.
However, waiting for HMRC’s letter may leave you with limited time to prepare. We strongly recommend reviewing your position now and considering the necessary steps to ensure your systems and processes are ready.
Newly self-employed or first-time landlords
Where trading or rental income begins for the first time on or after 6 April 2025, HMRC will annualise the income reported on the 2024/25 return to determine whether MTD applies from April 2026.
Exemptions From MTD
You may apply for an exemption if it is unreasonable or impractical for you to comply – this may include issues relating to:
- Age
- Disability
- Digital connectivity
- Religious grounds
The application process for exemption is available via HMRC’s online portal.
Automatic exemptions – unlimited period
- Companies will not be brought into MTD IT
- Partnerships and LLPs are expected in the future, note that the individual partners could be caught if they have ‘qualifying income’ as a sole trader or landlord in their own right
- The client must have a National Insurance Number on 31 January 2026, if they do not have one, then they are exempt this year
- Individuals with no qualifying income or income below the MTD income threshold
- Trustees, executors and personal representatives in that capacity
- If the client has an attorney acting on their behalf
Fixed term exemptions
The following will not have to join MTD IT until updated:
- Minsters of religion who file page SA102M
- Recipients and transferors of the Married Couples Allowance or the Blind Person’s Allowance
- Members of Lloyds Underwriters
Automatic exemptions until April 2027
- Taxpayers in receipt of income from Trusts or Estates
- Taxpayers claiming averaging adjustments (farmers, musicians, writers and other creative artists)
- Taxpayers claiming qualifying care relief
- Taxpayers who filed non-residence (SA109) pages with their 2024/25 tax return and expect to file this page again in 2026/27
What MTD for Income Tax involves
Once within MTD, affected individuals must:
- Keep digital accounting records, and
- Submit quarterly updates of income and expenses to HMRC, followed by
- A Final Declaration after the year end (which replaces the Self-Assessment tax return)
HMRC will not provide its own software. You must therefore use HMRC approved digital software capable of maintaining records and sending submissions directly.
Quarterly submission deadlines
Quarterly updates are cumulative and must be submitted by the following deadlines:
| Quarter | Reporting Period (Tax Year) | Calendar Quarter Option | Filing Deadline |
| 1 | 6 April – 5 July | 1 April – 30 June | 7 August |
| 2 | 6 April – 5 October | 1 April – 30 September | 7 November |
| 3 | 6 April – 5 January | 1 April – 31 December | 7 February |
| 4 | 6 April – 5 April | 1 April – 31 March | 7 May |
If you prefer your submissions to align with calendar month end, you may elect to do so before your first update of a tax year, assuming your software supports it.
Multiple trades and property income
- Separate updates are required for each trade.
- One combined submission is made for all land and property income.
- For jointly held property, only your share of the income must be reported (expenses may be included if preferred).
The Final Declaration will combine all sources of income, allowances and reliefs, with the resulting liability due by the usual 31 January deadline.
Tax payment timings
There are no changes at this stage to payment dates or the system of payments on account.
What counts as qualifying income?
Your obligation to join MTD from April 2026 is determined by:
- Self employment income, and/or;
- Land and property income
reported on your 2024/25 return.
Income from partnerships and basis period reform transitional profits does not count.
Non-UK residents are only required to comply in respect of income taxable in the UK, and if they have a National Insurance number.
MTD penalties: a new points-based system
The new penalty regime applies:
- 1 point for each late submission
- Points are tracked separately for each reporting obligation
- A £200 penalty is charged once the threshold is reached
| Submission Frequency | Points Before Penalty |
| Annual | 2 |
| Quarterly | 4 |
| Monthly | 5 |
How can Mercer & Hole support you with MTD?
- MTD registration support – Mercer & Hole can manage the Making Tax Digital registration process on your behalf, including a review of your circumstances and, where appropriate, preparing and applying to HMRC for exemption from MTD requirements.
- Virtual Finance Team– Our Virtual Finance team that can work with you to identify and implement the most suitable software solution to meet the MTD IT requirements, tailored to your business needs and processes. In addition, they can provide an initial assessment of your current records, systems, and processes, including the support in moving from existing systems to MTD‑compliant processes.
- Training and guidance – Practical training for you on the implementation of new software.
- Tailored support for complex affairs – Specialist advice where there are multiple income streams, property portfolios, or other complexities under MTD.
- Liaison and ongoing support – We can liaise and communicate directly with HMRC and any relevant external parties on matters relating to MTD.
- Quarterly update preparation and review – Preparation and/or review of quarterly MTD submissions to ensure accuracy, consistency, and compliance before filing with HMRC.
- Spreadsheet bridging and submissions – Where you currently use spreadsheets, we can ‘bridge’ your current information with HMRC compliant software and submit the required MTD ‘updates’ accurately and efficiently. This will avoid the need to register for new software.
- Process and bookkeeping support – Ongoing bookkeeping assistance or oversight to ensure digital records are maintained correctly throughout the year and aligned with MTD standards.
- End‑of‑period statement (EOPS) and final declaration support – Assistance with the year‑end processes required under MTD, including adjustments, claims, and final submissions.
Please get in touch with your usual adviser or contact us if you have any questions at all about Making Tax Digital. Taking proactive steps now will make the transition significantly smoother.
