REFERENCE · MTD TIMELINE
Making Tax Digital, by year and by cohort.
Where MTD is now, what's coming next, and what each cohort needs to do six and twelve months out from their start date.
Where we are
MTD for VAT is fully in force.
Every VAT-registered business. Irrespective of turnover. Must keep digital records and file via MTD-compatible software since April 2022. There are no exemptions for being below the £90,000 registration threshold; voluntary registration brings you in.
MTD for Income Tax Self Assessment (MTD ITSA) lands next, in three phases by income threshold, starting April 2026.
MTD for Corporation Tax was originally planned for 2026 but has been deferred. HMRC has not given a confirmed start date.
MTD ITSA phases
Three start dates, three thresholds.
| Phase | Start date | Gross income threshold | Identified by |
|---|---|---|---|
| Phase 1 | 6 April 2026 | Over £50,000 | 2024–25 SA return (filed by 31 Jan 2026) |
| Phase 2 | 6 April 2027 | Over £30,000 | 2025–26 SA return (filed by 31 Jan 2027) |
| Phase 3 | 6 April 2028 | Over £20,000 | 2026–27 SA return (filed by 31 Jan 2028) |
Threshold is gross income (turnover) from self-employment AND property combined, not profit. Both sources together exceed the threshold = both in scope.
What MTD ITSA requires
Quarterly updates plus an annual finalisation, all through software.
Four quarterly updates per business, summarising income and expenses by category. Standard quarter ends are 5 July, 5 October, 5 January, 5 April. Each update is due one month after the quarter ends. The "calendar quarter" election (30 Jun / 30 Sep / 31 Dec / 31 Mar) is available. Pick it during sign-up.
A final declaration replaces the SA tax return, due by 31 January following the tax year. Same as today. This is where year-end adjustments (capital allowances, private use, accruals) get made.
Penalty regime mirrors MTD VAT: points-based for late filing (threshold 4 points for quarterly), percentage penalties for late payment of the year-end balance.
By cohort: what to do when
Six and twelve months out from your start date.
12 months out
Confirm position
- Confirm whether you are in scope for the upcoming phase.
- Calculate combined gross income from self-employment and property.
- Decide whether to elect for calendar quarters at sign-up.
- Open a separate business bank account if not already.
6 months out
Choose software
- Pick from HMRC's approved software list.
- Connect your bank feed; test for at least 30 days.
- Set chart of accounts to match SA103/SA105 categories.
- Confirm software handles your specific situation (multiple trades, joint property, CIS).
3 months out
Sign up and dry run
- Sign up to MTD ITSA via your business tax account.
- Authorise software for income tax (separate from VAT auth).
- Run a sandbox quarterly submission with prior data.
- Confirm accountant agent authorisation refreshed for ITSA.
Exemptions and exclusions
A handful of cases sit outside MTD ITSA.
- Trustees and personal representatives. Outside scope. They continue with the existing SA process.
- Non-resident companies with UK property. Already file via the Non-resident Landlord Scheme; not in MTD ITSA.
- Partners in partnerships. Excluded for now. Partnerships themselves were originally planned for MTD; date deferred indefinitely.
- Foster carers and shared-lives carers. Excluded where qualifying-care relief takes them below the trade-profit threshold.
- Digitally excluded. Apply for exemption on grounds of disability, age, religion, location, or no reasonably available digital infrastructure. Genuine cases only.
Common questions
- I'm a limited-company director with rental income. Am I in?
- The threshold is on your personal SA income. Self-employment plus property. Director's PAYE salary and dividends don't count toward the trigger. So if your rental income alone is over the threshold, you're in. If it isn't and you have no self-employment, you're out.
- Does VAT MTD authorisation cover ITSA?
- No. Authorisation is per-tax. You (and your agent if applicable) need a separate authorisation for income tax. The 64-8 form covers SA but MTD ITSA may require an additional digital handshake.
- Can I keep using a spreadsheet?
- Only with a "bridging" tool that creates a digital link from spreadsheet to HMRC. Manual copy-paste between spreadsheet and filing software breaks the digital-link rule. Approved bridging tools are on the HMRC software list.
- What if I cross the threshold mid-year?
- You join MTD on the 6 April that follows the SA return showing you above the threshold. So crossing in 2025–26 means joining on 6 April 2027. There's no mid-year entry.
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