Landlords and self-employed people earning between £20,000 and £30,000 a year will now be required to switch to the Making Tax Digital (MTD) regime from 6th April 2028.
HMRC previously stated that the Making Tax Digital for Income Tax (MTD for ITSA) scheme would expand to include lower-income taxpayers by the end of this Parliament, but April 2028 is an earlier start than expected, pushing 900,000 more taxpayers to make the switch.
If you earn £20,000–£30,000 annually from self-employment or rental income, here’s what you need to know to follow HMRC regulations and avoid penalties for non-compliance.
New MTD for ITSA deadline
As reported earlier, taxpayers earning more than £50,000 a year must begin using the MTD for ITSA system for the 2026–2027 tax year from 6th April 2026.
However, the deadline for filing returns and paying tax bills for this year is not until 31st January 2028. This doesn’t leave much time for HMRC to sort out any issues with this group before the next wave of taxpayers start using the system by April 2028.
Unrepresented taxpayers earning £20,000 to £30,000 a year will need access to free or low-cost software to prepare for 2028, which currently has limited availability – though there could be more options available in the next couple of years.
The relevant income for this threshold will be for the 2026–2027 tax year. This may be lowered in the future, as the government plans to expand MTD to include taxpayers earning below £20,000.
MTD self-assessment submission
While it was thought that taxpayers could use the standard online HMRC service to submit year-end self-assessment tax returns, this is not going to be possible.
HMRC has specified that mandated taxpayers must use suitable MTD software that can handle tax return submissions. If your chosen software isn’t capable of this, then you will need a different software package to meet HMRC’s year-end requirements.
The tax agency has provided a list of MTD compatible software on the government website.
Time to switch to MTD software
Do you earn £20,000 to £30,000 a year from self-employment or renting out properties as a landlord? Are you prepared for Making Tax Digital for Income Tax?
It’s better to switch to new software sooner rather than later, so you can get to grips with the new system before April 2028 and avoid penalties for late submission or late payment.
If you aren’t sure which software to use or would rather outsource digital accounting to the professionals, you can speak to our team of accountants in Barnsley.
At gbac, we provide a range of financial services, including bookkeeping and tax management, which can help you streamline your accounts and stay up to date with HMRC compliance.
To learn more about how we can assist you, browse our website or call 01226 298 298. You can also email us at info@gbac.co.uk and we will be in touch with more information.