Making Tax Digital for Income Tax: Your Guide to the 2026 Changes

Making Tax Digital for Income Tax: Your Guide to the 2026 Changes

The UK tax landscape is about to undergo a significant transformation. Following the recent Autumn Budget announcement, the government has confirmed its commitment to Making Tax Digital for Income Tax (MTD IT), marking one of the biggest changes to tax administration in recent years.

What’s Changing?

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) modernises the UK tax system and aims to create one of the world’s most digitally advanced tax administrations. The goal is to help taxpayers manage their tax obligations accurately and efficiently.

Key Implementation Dates

The rollout will happen in phases, affecting different income brackets at different times:

April 2026 (Tax Year 2026/27) – Affects: Self-employed individuals and landlords with income (turnover) over £50,000. The first major wave affecting approximately 795,000 businesses

April 2027 (Tax Year 2027/28) – Affects: Self-employed individuals and landlords with income (turnover) over £30,000

By 2029 (End of Parliament) – Affects: Self-employed individuals and landlords with income (turnover) over £20,000

This is a new addition to previously announced plans

What Do You Need to Do?

Under the new MTD IT system, affected individuals will need to:

• Digitise Record-Keeping
  Maintain digital records of all business income and expenses
• Submit Quarterly Updates
  Provide HMRC with quarterly updates for each revenue stream
  This applies separately to self-employed business income and property income
• Submit Final Declarations
  Complete an annual final declaration of business income
• Meet Payment Deadlines
  Continue paying tax by January 31st of the following tax year
  This deadline remains unchanged from the current system

Important Notes

• This change follows the successful implementation of Making Tax Digital for VAT, which has been mandatory for all VAT-registered businesses since April 2022
• The government has yet to announce implementation dates for Partnerships
• Details regarding Making Tax Digital for Corporation Tax remain pending

Next Steps

If you’re likely to be affected by these changes, now is the time to start preparing. Consider reviewing your current record-keeping systems and exploring digital accounting solutions that will comply with the new requirements.

Remember, while 2026 might seem distant, preparing early will ensure a smooth transition to the new system and help you avoid any last-minute complications.

Stay tuned for more updates on Making Tax Digital for Income Tax as further details become available.