Making Tax Digital for Income Tax – the new timeline
HMRC has confirmed the revised timeline for MTD for Income Tax, starting with those earning over £50,000 in April 2026.
Following consultation, the government has provided clarity on the rollout of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA). The new timeline starts in April 2026 for sole traders and landlords with income over £50,000.
Those with income between £30,000 and £50,000 will follow in April 2027. Smaller businesses earning less than £30,000 are currently under review. This phased approach is intended to give businesses more time to prepare for the digital transition.
Why the delay?
The rollout of MTD for Income Tax has been delayed several times. HMRC acknowledged that both businesses and the accounting profession needed more time to prepare for the sheer scale of the change. The delay also allows software developers more time to refine their products and ensures that HMRC's own systems can handle the massive influx of quarterly data.
What businesses need to do
Despite the delay, the core requirements of MTD remain unchanged. Affected businesses will need to maintain digital records of all income and expenses and use MTD-compatible software to submit quarterly updates to HMRC. Paper records and basic spreadsheets will no longer be sufficient.
Using the extra time wisely
We strongly advise businesses not to view the delay as an excuse to do nothing. Transitioning to cloud-based accounting software takes time. Using the intervening period to adopt digital tools will not only ensure you are compliant well ahead of the deadline, but will also provide immediate benefits in terms of better cash flow visibility, easier invoicing, and reduced administrative burden.
Disclaimer
The information contained in this article is for general guidance on matters of interest only. It should not be used as a substitute for consultation with professional accounting, tax, legal, or other competent advisers. Before making any decision or taking any action, you should consult a Kingscott Dix professional.