Two-year delay to Making Tax Digital

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HMRC has officially announced that Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) has been postponed for two years.

Putting back the date means that the mandatory use of software will be phased in from April 2026, rather than April next year.

From April 2026, businesses, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through software.

Those with an income of between £30,000 and £50,000 will need to do this from April 2027.

The government says it will now “review the needs” of smaller businesses, and particularly those under the £30,000 threshold.

It will look in detail at how the Making Tax Digital for Income Tax Self-Assessment service can be shaped to meet the needs of smaller businesses and the best way for them to fulfil their income tax obligations.

And once that review is complete and in consultation with businesses, taxpayers and agents— the government will lay out the plans for MTD to become mandatory.

A key part of a government drive to digitalise the tax system, the scheme was originally planed for introduction in April 2024.

This latest postponement is needed to “maximise the benefits”, according to Victoria Atkins, financial secretary to the Treasury.

She said: “It is important to ensure this works for everyone: taxpayers, tax agents, software developers, as well as HMRC.

“Smaller businesses in particular should be able to experience the benefits of increased digitalisation of Income Tax in a way which meets their needs.”

Jim Harra, chief executive and first permanent secretary of HMRC, has stressed that MTD remains “a critical part” of the drive to modernise the UK tax system.

He said: “A phased approach to mandating MTD for income tax will allow us to work together with our partners to make sure that our self-employed and landlord customers can make the most of the opportunities this will bring”.

From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. 

MTD for ITSA will apply to individuals’ annual income of more than £10,000. Most businesses will have two years to prepare and test the service voluntarily before it is introduced.