With just seven months until Making Tax Digital (MTD) for Income Tax goes live, HMRC has confirmed that 864,000 landlords and self-employed individuals must comply from April 2026.
The first phase covers those with a qualifying income above £50,000. They must file quarterly updates via software and complete a final year-end submission. The first quarterly deadline falls on 7 August 2026, and a new penalty regime for non-compliance applies.
MTD will then extend rapidly. From April 2027, the threshold drops to £30,000, bringing a further 1.1 million people into scope. By April 2028, anyone with income over £20,000, another 975,000 individuals, will be required to file quarterly returns. In total, around 2.9m taxpayers will eventually be affected.
Many will face a steep adjustment. A quarter of those earning over £50,000 do not have an accountant or adviser, rising to 37% in the £30,000-£50,000 bracket. While software adoption is higher among those with professional representation, only half of landlords and self-employed taxpayers currently use commercial software.
This shift means significant extra costs, with limited free options. Most software packages charge around £20 per month, or £240 annually.
The reforms guarantee a new customer base for software providers. For taxpayers, particularly those without advisers, MTD means extra expense and an overhaul of familiar processes.
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