Making Tax Digital for Income Tax (MTD for IT) will bring a fundamental change to how taxpayers and agents interact with HMRC. It aims to promote better and timely record-keeping to reduce errors and mistakes, as part of the government’s aim to reduce the tax gap.
MTD will operate on a more modern HMRC IT platform, improving security whilst enabling improved digital services such as pre-population of data and nudges/prompts to taxpayers, fed by better connections with data held by HMRC.
Learn about HMRC's guidance on MTD.
HMRC has launched an interactive MTD tool: ‘check if you need to use Making Tax Digital for Income Tax’ to make it simpler for taxpayers (and their agents) to understand if they are in scope of MTD and, if so, when they need to start complying with the requirements.
HMRC has also published promotional material on the benefits of MTD.
The rollout of MTD will start with sole traders and landlords with income over £20,000 from April 2026, then those with a turnover of £30,000 from April 2026 and £20,000 from April 2028.
In addition, the following groups will not be required to use MTD: customers who have a Power of Attorney, non-UK resident foreign entertainers and sportspeople who have no other income sources that count as qualifying income for MTD and customers for whom HMRC cannot provide a digital service.
Also, the following groups will not be required to join MTD over the course of this Parliament - ministers of religion, Lloyd’s Underwriters and recipients of the Married Couples’ and Blind Persons’ Allowances.
Finally, the government increased late payment penalties for VAT taxpayers from April 2025. The new rates are 3% of the tax outstanding where tax is overdue by 15 days, plus 3% where tax is overdue by 30 days, plus 10% per annum where tax is overdue by 31 days or more. However, penalties will not generally apply to those who join MTD for the first year.