TAX • PLANNING • 2025
Making Tax Digital (MTD): Who Must File and Who’s Exempt in 2026
Summary: Making Tax Digital (MTD) is changing how landlords and the self-employed report income to HMRC. From April 2026, those with annual business or property income above £50,000 will need to keep digital records and submit quarterly reports. But many—like limited companies, trusts, and deceased estates—are not caught by these rules.
- Understand what MTD is (and isn’t)
- See who must file based on income thresholds
- Learn which entities are fully exempt
Context: Who This Applies To
MTD applies mainly to UK individuals with self-employed or property income—such as landlords, sole traders, or digital sellers—whose combined gross income exceeds the HMRC thresholds. It does not apply to limited companies, partnerships, or trusts at this stage.
Rules & Thresholds (2025–26)
According to HMRC’s confirmed rollout plan:
- From April 2026 — individuals with income over £50,000 must join MTD for Income Tax Self Assessment (ITSA).
- From April 2027 — those earning above £30,000 join the scheme.
- Further extension to £20,000 or below is still under review.
| Category | Included in MTD ITSA? | Notes |
|---|---|---|
| Individual Landlord (Gross Income £60k+) | Yes ✅ | Quarterly digital filing required from April 2026 |
| Individual Landlord (Gross Income £45k) | No ❌ | Will join from April 2027 if income exceeds £30k |
| Limited Company Landlord | No ❌ | Covered by existing Corporation Tax digital filing |
| Trust or Estate | No ❌ | MTD ITSA does not apply to trustees or deceased estates |
| Partnership | Not yet ❌ | MTD for partnerships delayed—expected after 2027 |
What MTD Is—and What It Isn’t
- ✅ It is a system for digital record keeping and quarterly income submissions via approved software.
- 🚫 It is not an early tax payment system—tax remains due after the year-end.
- 🚫 It does not replace Self Assessment tax returns yet (final declaration still required).
- ✅ It encourages real-time accuracy and reduces HMRC errors through automation.
Worked Example
Example: Jane, a self-employed landlord with £55,000 gross rental income, must register for MTD ITSA from April 2026. She will file four quarterly updates via MTD-compatible software (such as Xero or QuickBooks), plus one annual declaration. If her gross income falls below £50,000 for three consecutive years, she can deregister.
Who Can Relax (for Now)
HMRC specifically excludes certain taxpayers from MTD ITSA. You do not need to worry yet if you are:
- A director of a limited company filing under Corporation Tax
- Acting as a trustee or executor of a deceased estate
- Operating a partnership (MTD delayed)
- Below the current £30,000 threshold
📅 Upcoming Live Webinar – 12th November 2025
Making Tax Digital (MTD) for Landlords & Property Investors
Join Simon Misiewicz FCCA ATT EA and the Optimise team to learn how to prepare, choose compliant software, and avoid HMRC penalties.
HMRC MTD Guidance Read Full Guide Watch Explainer Video
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We’ll help you identify whether MTD applies to your portfolio, review your software options, and ensure full compliance before 2026.
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Disclaimer: This article provides general information and not personalised tax or legal advice. Always check HMRC’s official guidance or seek professional advice before acting.
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