Question 1

What is Making Tax Digital for Income Tax?

Accepted Answer

Making Tax Digital (MTD) for Income Tax is HMRC's phased move away from the annual Self Assessment return towards digital record-keeping and quarterly updates submitted through compatible software, with a final declaration at the end of the year. It is being rolled out gradually based on your gross income from self-employment and property, with higher-income taxpayers required to join first.

Question 2

How is the income threshold worked out?

Accepted Answer

HMRC looks at your combined gross income from self-employment and UK property (before expenses) reported on a qualifying tax return, and compares it against the threshold for each phase. If your combined gross income exceeds the threshold for a phase, you will be required to join MTD for Income Tax from the date that phase becomes mandatory, based on the income reported on the return for the relevant earlier tax year.

Question 3

What will I actually need to do once I am in scope?

Accepted Answer

You will need to keep digital records of your income and expenses (rather than paper records or basic spreadsheets that aren't linked to compatible software), submit a quarterly summary update to HMRC every three months through MTD-compatible software, and submit a final declaration after the end of the tax year to confirm your figures and finalise your tax position, replacing the traditional Self Assessment return.

Question 4

What software can I use?

Accepted Answer

You will need software that is recognised by HMRC as compatible with Making Tax Digital for Income Tax. Many landlord-focused options (such as Landlord Studio and Hammock) are designed specifically around rental income and can handle the digital record-keeping and quarterly submissions for you. HMRC also publishes and maintains an official list of approved software on GOV.UK, which is worth checking before you commit to any one product.

Question 5

What if my income is close to a threshold, or changes from year to year?

Accepted Answer

Thresholds are assessed using the income reported on a specific earlier tax year's return, so a single high or low year can move you in or out of scope for a future phase. If your income fluctuates close to a threshold, it is worth checking your position each year rather than assuming your status is fixed, and getting ahead of digital record-keeping before you are required to, so the transition is smoother when your turn comes.

Making Tax Digital Eligibility Checker

Combined gross income

What you'll need to do once in scope

Frequently asked questions

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Making Tax Digital Eligibility Checker

Combined gross income

What you'll need to do once in scope

Frequently asked questions

What is Making Tax Digital for Income Tax?−

How is the income threshold worked out?+

What will I actually need to do once I am in scope?+

What software can I use?+

What if my income is close to a threshold, or changes from year to year?+

Related calculators

Related guides