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Making Tax Digital for Income Tax: Will It Affect You in April 2026?

April 2026 might sound comfortably far away. In tax terms, it isn’t.

Making Tax Digital for Income Tax is moving from discussion to reality, and many self-employed individuals and landlords still aren’t sure whether it applies to them.

The confusion usually centres around one question:

“Do I actually fall within the rules?”

Let’s break it down clearly.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax Self Assessment (often shortened to MTD for IT) is a reform introduced by HM Revenue & Customs (HMRC) to modernise how income is reported.

If you fall within scope, you’ll need to:

  • Keep digital records of income and expenses
  • Use compatible accounting software
  • Submit quarterly updates to HMRC
  • Submit a final declaration at the end of the tax year

Instead of one annual tax return, you could be making five submissions per year.

It’s not about paying more tax. It’s about reporting more frequently.

The Income Thresholds

From 1 April 2026, MTD for Income Tax becomes mandatory if:

  • You are self-employed and/or a landlord
  • Your combined gross income from those sources exceeds £50,000 per year

From 1 April 2027, the threshold drops to £30,000.

A key point many people miss: the threshold is based on gross income, not profit.

That distinction alone is catching people off guard.

What Income Counts?

The threshold includes:

  • Sole trader business income
  • UK property income
  • Overseas property income

If you have both rental income and self-employment income, they are added together.

For example, £28,000 from your business and £25,000 from rental property equals £53,000. That places you within scope from April 2026.

Who Is Not Affected (For Now)?

Currently, MTD for Income Tax does not apply to:

  • Limited companies
  • Partnerships
  • Individuals below the income threshold

However, HMRC has indicated that further expansion is expected over time.

Why You Should Check Now

HMRC will determine whether you must comply based on your latest submitted tax return.

That means if your recent figures exceed the threshold, you could automatically fall into the 2026 rollout.

Even if you’re close to the threshold, preparation shouldn’t wait until the last minute.

Next week, we’ll look at what MTD will mean in practice and the steps you should be taking now to avoid disruption.

If you’re unsure whether you’ll be affected, now is the time to review your income position and plan ahead.

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