Making Tax Digital (MTD) for Income Tax Self Assessment is moving closer, with the first group of taxpayers being mandated from 6 April 2026. Further groups will be brought into the regime in April 2027 and April 2028.
This update summarises the key points announced at Budget 2025 and what they mean in practice.
When MTD for Income Tax will apply
From 6 April 2026, many self assessment taxpayers will be required to comply with Making Tax Digital for Income Tax. This will involve keeping digital records and submitting quarterly updates to HMRC using compatible software, followed by an annual final declaration.
Additional taxpayers will be mandated in later years depending on their circumstances.
Late filing penalties for quarterly submissions
The government has confirmed that late filing penalties will not be charged for quarterly MTD submissions during the 2026/27 tax year.
This transitional measure is intended to give taxpayers time to adapt to the new quarterly reporting requirements.
It is important to note that this easement applies only to quarterly updates. The annual tax return for the 2026/27 tax year must still be filed by 31 January 2028, and penalties will apply if this deadline is missed.
All quarterly updates must be submitted before the annual tax return can be finalised.
Taxpayers deferred until April 2027
HMRC had previously confirmed that taxpayers completing the SA109 self assessment pages, including those with residence or remittance basis considerations, would not need to comply with MTD for Income Tax until April 2027.
Budget 2025 extended this deferral to additional groups. The following taxpayers will now also be deferred until April 2027:
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recipients of trust and estate income
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individuals using averaging adjustments, such as farmers and creative artists
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recipients of qualifying care income
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non-UK resident foreign entertainers or sportspeople
Taxpayers who are under deputyship will be exempt from Making Tax Digital for Income Tax.
What to consider now
Even where a deferral applies, it is sensible to be aware of how MTD for Income Tax will affect record keeping and reporting going forward. Quarterly submissions represent a significant change from the current annual filing process.
Further guidance will be issued by HMRC as mandation dates approach, and affected taxpayers will receive direct communication confirming when MTD for Income Tax applies to them.
If you have any questions about how these changes may affect your tax affairs, please contact A&C Chartered Accountants.