Yes, with the same wording as for MTD VAT. Applications will not open until shortly before the first taxpayers are mandated from April 2026. Apply for an exemption from Making Tax Digital for Income Tax.

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If a taxpayer is in MTD income tax, other income (eg, employment, pension, dividends or investment income) does not need to be reported quarterly to HMRC. It is reported annually as part of the year-end tax return in a way that is similar to (but not quite the same as) the self assessment tax return (and to the current self assessment deadline). There are two ways to report this other income:

• Using MTD income tax accounting or bridging (submission) software that has additional functionality covering the rest of the tax return.
• Using a tax software product (eg, a commercial self assessment software product that has been upgraded to comply with MTD income tax).

Different products can be used to submit the quarterly updates and the year-end tax return. Different products can be used to submit quarterly updates for different trades, for UK property and overseas property. There will not be a paper option.

The current self assessment system (including the paper return) will remain available to taxpayers not in MTD income tax but in due course may be replaced by a new user interface.

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Taxpayers with turnover of more than £50,000 are required to join MTD income tax from April 2026. The turnover threshold reduces to £30,000 from April 2027 and to £20,000 from April 2028. The turnover test is applied to:

• Turnover/gross income (not profits).
• Turnover from self-employment and property only, added together (see below for the specific boxes on the tax return).
• Each taxpayer individually (so where there is income from jointly held property the individual’s share of that gross income per the tax return is what counts).

Income not reported on the tax return is not included for the purposes of the turnover test. Examples of this include income not reported because it is wholly covered by:

• the trading allowance;
• the property allowance; or
• rent a room relief.

The test does not include partnership income or any other income that is not listed below:

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When MTD income tax starts in April 2026, the £50,000 turnover test will be applied to the information in the 2024/25 tax returns that are due to be filed by 31 January 2026. There will be a requirement for each taxpayer, or their agent, to sign up individually but HMRC will automatically set up the obligations to file quarterly updates if taxpayers do not sign up.

Where a taxpayer no longer has any income from self-employment or property, they will probably need to notify HMRC that these income sources have ceased and ensure that the MTD income tax obligations are cancelled (the process has not yet been developed). A taxpayer whose turnover/gross income exceeds £50,000 in 2024/25 but drops below £50,000 in 2025/26 will still need to comply with MTD income tax requirements from April 2026. 

When the turnover threshold reduces to £30,000 in April 2027, it will be applied to information in the 2025/26 tax returns due to be filed by 31 January 2027. When the turnover threshold reduces to £20,000 in April 2028, it will be applied to information in the 2026/27 tax returns due to be filed by 31 January 2028. 

A taxpayer that breaches the turnover threshold for the first time in a tax year (including a taxpayer new to self assessment) is required to join from 6 April following the due date for the self assessment tax return for that tax year.

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A taxpayer who is in MTD income tax and whose turnover/gross income falls below threshold for three successive tax years can claim exemption from the start of the following tax year. 

Example:

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Quarterly updates are required for standard tax year quarters (ie, to 5 July, 5 October, 5 January, and 5 April). There is an option to elect for calendar quarters (ie, to 31 June, 30 September, 31 January, and 31 March). This does mean a bunching of agents’ workloads and any clash with the timing of VAT returns also needs to be considered. The due date for the quarterly updates is 7 August, 7 November, 7 February, and 7 May regardless of whether an election for calendar quarters has been made.

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HMRC intends to introduce MTD income tax for partnerships but no start date has been announced. When introduced, the MTD income tax obligations will apply to the partnership rather than individual partners. Until MTD income tax is extended to partnerships, partners must continue to report partnership income annually along with income from other non-MTD sources. 

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Each individual is required to comply with MTD income tax requirements for their income from property. This includes their share of income from any jointly held properties. There is no form of reporting by property or portfolio of properties. Each taxpayer’s UK income from property needs to be aggregated before being submitted to HMRC, likewise for income from overseas property. 

This will create very significant practical problems for taxpayers who have different property holdings with different groups of joint owners. In some cases, the accounting may be done by different people and using different software products and the taxpayer may have great difficulty obtaining the information in time to submit the quarterly update and in complying with the requirement to have digital links from the transaction records through to submission. 

HMRC has announced two concessions that allow joint property owners to:

• report income (gross) from jointly held properties in their quarterly update while leaving reporting of expenses until the year end finalisation process; and
• create a single digital record for each category of income from jointly held properties and a single digital record for each category of expense from jointly held properties. This removes the need for each joint property owner to create digital records of each transaction.

The data flows and choice of software will need careful consideration where there is income from jointly held property.

It may be the case that only some of the joint owners are required to comply, it depends on the threshold test applies in their particular circumstances. 

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Separate obligations to comply apply to:

• Each separate trade (equivalent to the requirement to submit a separate SA103 for each trade)
• UK property income (equivalent to the SA105)
• Overseas property income (equivalent to the land and property section of the SA106.

There can be only one set of submissions (quarterly updates) for each obligation. If records relating to one obligation are held in more than one software product, they will need to be combined into one product before the submission is made to HMRC. This may be a problem where records for different divisions of the same trade or records for different properties are held in different systems.

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Quarterly updates can be amended by resubmitting them. In a change from the original design, quarterly updates are now cumulative, year to date data. This will reduce the need for quarterly updates to be resubmitted as any corrections will be picked up by the next quarterly update.

The fourth quarterly update can be amended up to the year-end tax return being submitted. Once the year-end tax return has been filed changes will be made following a process similar to the process for amending a self assessment tax return (precise details not yet available).

It is not yet clear which adjustments need to be made by submitting a revised quarterly update for the fourth quarter and which adjustments can be made as part of the annual adjustments (BSAS) process prior to the year-end tax return. HMRC’s expectation is that underlying records should be corrected rather than a journal entry being made and that the adjustments process should be used for tax and accounting adjustments only.

In particular, it is not clear how and where adjustments to reflect non-tax-year accounting dates will be made, that is another of the significant design issues that ICAEW has raised with HMRC.