What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax Self Assessment (often shortened to “MTD for ITSA” or just MTD) is HMRC's shift away from the once-a-year paper-and-spreadsheet tax return. Instead, affected landlords and sole traders must keep their records digitally, use MTD-compatible software, and send HMRC quarterly updates plus a final year-end declaration.
In short: the shoebox of receipts and the annual scramble are on the way out. Landlords need a system that keeps their income and expenses up to date all year round.
Does MTD apply to you? The thresholds and dates
Whether you're in scope depends on your qualifying income — your total gross income from property and any self-employment, beforededucting expenses. It's being introduced in stages:
- From 6 April 2026 — landlords and sole traders with qualifying income over £50,000.
- From April 2027 — those with income over £30,000.
- From April 2028 — those with income over £20,000.
HMRC works out which band you fall into from the income on your previous Self Assessment returns. If your property income is around or above these levels, it's worth getting your records digital now rather than waiting for the deadline.
What you'll actually have to do
- Keep digital records of your rental income and expenses as they happen (not reconstructed at year end).
- Send quarterly updates to HMRC through MTD-compatible software — a running total of income and expenses for the year so far.
- Submit a final declaration after the tax year ends, confirming your figures and any adjustments or reliefs — this replaces the Self Assessment return.
The quarterly deadlines
The standard update periods and deadlines for a tax year running 6 April to 5 April are:
- Quarter 1: 6 April – 5 July → due 7 August
- Quarter 2: 6 July – 5 October → due 7 November
- Quarter 3: 6 October – 5 January → due 7 February
- Quarter 4: 6 January – 5 April → due 7 May
You can also elect to use simpler calendar quarters (e.g. 1 April – 30 June), with the deadlines still falling on the 7th of the following month. Your final declaration is due by 31 January after the end of the tax year, as now.
What counts as “digital records”?
HMRC expects each item of income and expense to be recorded digitally and kept in software (or bridging software) that can talk to HMRC. A spreadsheet on its own generally isn't enough on the filing side, and re-typing everything once a year defeats the point. The practical answer is software that captures each rent statement and invoice as it arrives and keeps the totals current.
Penalties for getting it wrong
MTD comes with a new points-based penalty system for late quarterly submissions, plus separate penalties for late payment. Miss enough deadlines and points turn into fines — which is exactly why keeping records current, rather than cramming at year end, matters.
How to get MTD-ready now — a short checklist
- Check your qualifying income against the £50k / £30k / £20k bands and your start date.
- Move your records into digital software thistax year, so you're not migrating mid-deadline.
- Capture every rent statement, invoice and expense as it comes in.
- Decide who files your quarterly updates — you (through HMRC-recognised software) or your accountant.
- Keep your compliance certificates and dates in one place too.
Where DREAM fits
DREAM is the record-keeping layer that makes all of the above painless. It keeps your rental income, expenses and tax figures digital and up to date all year — and its AI reads your uploaded statements and invoices, so the numbers fill themselves in. You get:
- Tax-year and quarterly figures laid out the way your return needs them (with SA105 box references).
- AI document scanning — upload a statement or invoice and the figures are read for you to confirm.
- Compliance remindersfor gas safety, EICR and EPC expiry, so you don't get caught out.
- Accountant access — invite your accountant to view your figures directly.
Your quarterly updates are filed through HMRC-recognised software or by your accountant; DREAM's job is to keep the underlying records tidy and your figures ready, so filing is a formality rather than a fright.
This guide is general information, not tax advice, and MTD rules can change — always check the current guidance on gov.uk and confirm your own position with a qualified accountant or HMRC.