HMRC Launches Phased Making Tax Digital for Income Tax

The HM Revenue and Customs (HMRC) is implementing Making Tax Digital (MTD) for Income Tax, marking the most significant change to the tax return process since the introduction of Self Assessment more than 30 years ago. The system replaces the single annual tax return with a requirement for sole traders and landlords to record and report income and expenses throughout the year.

Implementation follows a phased schedule based on qualifying income. Taxpayers with a turnover exceeding £50,000 began using the system on April 6, 2026. Those with turnover above £30,000 are required to join by April 6, 2027, followed by those above £20,000 by April 6, 2028. Partnerships must also adopt the system, though the government has not yet announced a specific timeline for their transition.

James Murray, Financial Secretary to the Treasury, stated that the phased approach enables HMRC to build on experience from each stage of implementation before additional groups are brought into the regime.