In April 2026, the first wave of taxpayers will be brought into the Making Tax Digital (MTD) for Income Tax scheme.
With so many people about to start a new way of filing their taxes, the news that late filing penalties will be delayed has been very much welcomed by the self-employed sector.
What is Making Tax Digital?
Making Tax Digital is a key part of the government’s tax administration strategy – a 10-year plan with the aim of building a ‘trusted and modern’ tax system.
Eventually, all businesses will need to keep digital records by using software that works with MTD and then submit updates every quarter.
This will help to bring the tax system closer to real-time.
If you are self-employed or a landlord, you will be affected from the:
- 6th April 2026 – if you have an annual business or property income of more than £50,000
- April 2027 – if you have an annual business or property income of more than £30,000
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Late filing penalties delayed
In the Autumn Budget, it was confirmed that the government will not apply late submission penalties for quarterly updates during the 2026-27 tax year for Income Tax Self Assessment (ITSA) taxpayers required to join MTD.
Penalties will instead take effect from the 6th of April 2027; this will allow those covered under the new scheme time to adjust to the changes.
This decision has been backed by the Association of Taxation Technicians (ATT).
Jon Stride, chair of the ATT’s Technical Steering Group, said, “The Government’s announcement that taxpayers entering Making Tax Digital for Income Tax (MTD) will not face late filing penalties in their first year is a sensible step.
“More than 850,000 landlords and sole traders are expected to come into MTD from April next year. They will be required to use software to keep their records and file quarterly summaries of their income and expenses with HMRC. For some this will be a big change, and those trying their best to comply but struggling shouldn’t be penalised.
“We would also encourage HMRC to ensure they have sufficient support available to help taxpayers transition to MTD, especially the approximately 25% of affected taxpayers who don’t have an agent to help them.”
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