Making Tax Digital For Income Tax: Are you Exempt or Eligible?

Making Tax Digital for Income Tax (MTD for IT) is being introduced from 6 April 2026.

If you’re a sole trader or landlord, this will mean complying with the new rules around keeping digital records and submitting quarterly digital updates to HM Revenue & Customs (HMRC).

However, there are potential exemptions to the new MTD for IT rules. So, it may be that you can, for the moment, escape the mandatory move to digital tax returns.

Let’s see who will have to use MTD for IT, and who won’t be required to sign up.

Who WILL need to use MTD for IT?

MTD for IT is being introduced in a number of phases, starting with sole traders and landlords from the start of the 2026/27 tax year.

It’s mandatory to use MTD for IT if all of the following apply:

1. You’re a sole trader or a landlord registered for Self Assessment

2. You get income from self-employment or property, or both

3. Your qualifying income is more than £20,000

There’s more info here on what qualifying income is included.

Who will NOT need to use Making Tax Digital for Income Tax?

Not all sole traders and landlords will need to use the new MTD digital system. You’ll be exempt from using MTD for IT if:

• You meet certain conditions that make you automatically exempt from using the service

• You have applied for an exemption and HMRC approves your application

• Your qualifying income is £20,000 or less

When will you need to begin using MTD for IT, if eligible?

The qualifying income threshold for MTD for IT begins at £50,000 for the 2024/25 tax year, and will drop progressively over the next three tax years.

If your qualifying income is over:

• £50,000 for the 2024 to 2025 tax year, you will need to use it from 6 April 2026

• £30,000 for the 2025 to 2026 tax year, you will need to use it from 6 April 2027

• £20,000 for the 2026 to 2027 tax year, where the Government has set out plans to introduce legislation to lower the qualifying income threshold.

Business partnerships will be required to use Making Tax Digital for Income Tax in the future. The timeline for this is yet to be announced by HMRC.

Talk to us about getting ready for MTD for IT

You’ll start using MTD for IT once you submit your first Self Assessment tax return. However you can choose to sign up to the MTD scheme early, if you want to.

Talk to our team about Making Tax Digital and how we can help you select the right accounting software, understand the MTD rules and get ready for the start of MTD for IT

For advice about Accounting, Probate Law and Taxation; call our team

on 0203 488 7503, 01992 236 110 or contact us by email at  welcome@walshwestcca.com legal@walshwestlaw.com  or via our website www.walshwestcca.com