HMRC’s Making Tax Digital for Income Tax (MTD ITSA) program became mandatory on 6 April 2026 across the UK. Self-employed individuals and landlords with gross income exceeding £50,000 must now maintain digital records and submit quarterly updates via compatible software, replacing the traditional annual Self Assessment (GOV.UK — Making Tax Digital for Income Tax).
Background: A Reform Delayed Multiple Times
MTD for VAT has been mandatory since 2019 for businesses with turnover above £85,000. The Income Tax extension, originally planned for 2024, was postponed twice before being confirmed for April 2026 (Chartered Institute of Taxation). HMRC began notifying affected taxpayers by post from November 2025, based on 2023-24 returns.
The rollout is phased:
- 6 April 2026: gross income > £50,000
- April 2027: income between £30,000 and £50,000
- April 2028: income > £20,000
(Moore UK — When does MTD for Income Tax start?)
Practical Impact for Businesses
New Quarterly Requirements
Affected taxpayers must:
- Maintain digital records of all income and expenses in HMRC-recognised software
- Submit four quarterly updates (deadlines: 7 August, 7 November, 7 February and 7 May)
- File a final declaration before 31 January following the tax year end
HMRC announced a soft landing for the first April 2026 cohort: no penalty points will be issued for the first four late quarterly submissions (IBTimes UK).
Which Software to Use?
HMRC maintains a list of compatible MTD for Income Tax software (GOV.UK — Find compatible software). Recognised solutions include:
- Sage (Sage Accounting, Sage 50) — Newcastle-based legacy provider and UK accounting market leader (Sage UK — MTD Software)
- Xero — cloud platform highly popular with UK accountants
- QuickBooks Online — Intuit’s solution widely deployed among small businesses
- SAP Business One — MTD VAT compatible, with documented HMRC integration modules (NTT DATA — MTD with SAP Business One)
- NetSuite — native HMRC integration via the International Tax Reports SuiteApp, at no additional cost (NetSuite — MTD Support)
For businesses running mid-market ERPs (Sage X3, Dynamics 365, Infor), third-party connectors or bridging software enable HMRC submission without system changes (AppseConnect — MTD & ERP Integration).
Impact for International Companies with UK Operations
Multinational groups operating in the UK through subsidiaries or branches must ensure their local ERP (or UK accountant’s system) is MTD ITSA compliant — in addition to existing MTD VAT requirements. The challenge is twofold: UK tax compliance AND ability to feed data into group consolidation and reporting systems.
What to Watch Next
The threshold drops to £30,000 in April 2027, significantly expanding scope. Companies not yet affected should begin digitising their tax records now. HMRC hasn’t yet published final penalty regime details for MTD ITSA — a key point to monitor in coming months.
For deeper insight, read our UK ERP market overview covering local vendors and post-Brexit challenges, plus our mandatory e-invoicing guide for Europe for a continental view of digital compliance requirements.
