Making Tax Digital for Income Tax

Quarterly updates will not be as detailed as your annual Tax Return.

You will only be required to report details of your income and expenditure from self-employment and/or rental income for each of the quarters detailed in the sections 'Quarterly reporting – tax year basis' and 'Quarterly reporting – calendar year basis (election)'.

You will not be required to make accounting or tax adjustments at this stage, although nothing is stopping you if you wish.

If your qualifying income is under the VAT threshold (currently £90,000 for 2025/26), you can choose to opt for three-line account submission whereby you will only be submitting details of total income less total expenses every quarter.

If your qualifying income exceeds the VAT threshold, then HMRC will require you to supply them with more detailed information, where you will need to record and categorise each item on a line-by-line basis.

Each source of trade or property business will require its own separate quarterly report and submission.

This means if you are in receipt of both self-employment and property income, you will be required to submit eight quarterly submissions each year.

If you receive income from property overseas, this too will also need its own separate quarterly report meaning you will be required to submit 12 quarterly submissions each year

Where you and your spouse own a rental property equally, then only your share of the gross rent will be assessed as ‘qualifying income’ for the purposes of MTD for IT.

If you use the default tax year basis, then you will be required to keep a summary of income and expenses on the following basis.

 

 

Once this information has been collated in a digital record, you will then need to submit this to HMRC within 30 days to meet the following HMRC submission deadlines as advised below. 

 

If you decide to elect for the calendar year quarters, then you will report your quarterly income as follows:

 

 

The filing deadlines to HMRC do not change and are the same as set for calendar year quarter filing.

 

Once all four quarterly reports have been filed, a final declaration detailing the remainder of your income such as employment, pensions, your share of partnership income, bank interest, dividends, foreign income, capital gains will need to be reported to HMRC in a final declaration.

This will also allow you to make any last-minute adjustments to the quarterly information submitted in respect of your rental and self-employment income such as capital allowances, loan interest, private use adjustments etc.

The final declaration will follow the normal self-assessment deadline of 31 January following the end of the tax year.

The payment dates for tax will not change and remain the same as those you are used to. This is 31 January following the end of the tax year.

For those who are subject to make payments on account in respect of the following year, these too, will remain at 31 January and 31 July.

You will be exempt from MTD for Income Tax if on 31 January before the start of the tax year, you do not have a National Insurance Number. This mainly applies if you are a non-UK resident, non-UK national who has property income arising in the UK). In these circumstances, you will be required to continue to file self-assessment tax returns each year as normal.

If you are a UK resident, but do not have a National Insurance number, you will be required to apply for one if you meet the MTD for IT qualifying criteria and join MTD for Income Tax.

Exemptions are available where it is:

• Not reasonably practicable for you to use digital tools to keep your business records or submit quarterly returns due to age, disability, remoteness of location or for any other reason.
• You are subject to an insolvency procedure.
• Your business is run entirely by practising members of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records.

Where any of these apply, an application needs to be made to claim this exemption, with HMRC having 28 days to either grant or deny the application.

If your total qualifying income is under the income thresholds detailed above, then nothing changes.

You will not be required to submit quarterly income details and you will continue to complete and file a Self-Assessment Tax Return by 31 January annually.

For the time being, MTD for IT does not apply to:

• Taxpayers with qualifying income below £20,000
  If your qualifying income is below £20,000, you will not be required to join MTD and will continue filing a self-assessment tax return once a year. 
• Limited companies and partnerships
  The Government intends to roll out MTD to limited companies, partnerships and limited liability partnerships (LLPs) in the future. Timescales for introducing MTD to companies and partnerships has yet to be announced.
• Individual partners Members of partnerships and LLP’s are outside the scope of MTD
  However, you may have to join MTD for IT if you meet the thresholds and are in receipt of other qualifying income such as self-employment or rental income in your own name.
• Trusts, Estates, and Trustees including trustees of registered pension schemes
  The exemption does not, apply, however, to beneficiaries of bare trusts or interests in possession trusts who are in receipt of either self-employment income or income from property that exceeds the qualifying thresholds.