What is Making Tax Digital for income tax?
A little over 11 years after ‘Making Tax Easier’ was first announced in the March 2015 Budget, Making Tax Digital for income tax self assessment (MTD for ITSA) went live on 6 April 2026. The subtle rebranding along the way – replacing ‘easier’ with ‘digital’ – hints at the struggles to develop the system.
The 2015 Budget Red Book said, “…the government will transform the tax system over the next Parliament by introducing digital tax accounts, removing the need for annual tax returns. By the end of the next Parliament [2020], over 50 million individuals and small businesses will be able to see and manage their tax affairs online”. It has not worked out that way and, alas, annual tax returns are still with us.
Who needs to register for Making Tax Digital for income tax?
As a reminder, the first group of taxpayers who were meant to have registered with HMRC for MTD before 6 April 2026 were people personally registered for self assessment who:
• received income from self-employment and/or property (or both), and
• had qualifying income (basically gross income from self-employment and/or property) of more than £50,000 in 2024/25.
What are the key MTD for ITSA deadlines?
HMRC estimated that 864,000 people would fall into this initial wave, all of whom are required to deliver their first quarterly update of income and expenses to HMRC via HMRC-approved MTD software by 7 August 2026. Thereafter, further quarterly updates must be submitted by the 7 November, 7 February and 7 May, with a final tax return (under MTD) by the following 31 January.
Why has Making Tax Digital had a slow start?
According to HMRC, a week after the start of MTD, registrations numbered 250,000, nearly 170,000 of which were from tax agents and accountancy firms. Only 80,000 came from individuals. As the professionals would most likely comply with 6 April deadline, those numbers suggest that around 614,000 individuals failed to register on time.
What happens if your miss the registration deadline?
Perhaps in anticipation of a slow take-up, last November the Chancellor announced that in 2026/27 there would be no penalties for filing overdue quarterly updates. However, penalties will still apply for the final (unabolished) tax return and, under the MTD process, this can only be filed after all quarterly updates have been submitted.
Successive governments may have taken over a decade to introduce MTD, but if you are within its scope and have not registered, you do not have the option to procrastinate.
