Making Tax Digital for Income Tax: Mandation draws near

With just over a year until the first group of taxpayers will be legally required to submit quarterly updates, we look at the latest position for Making Tax Digital for Income Tax.

In recent months, we’ve been providing our members with the latest information and resources to get ready for Making Tax Digital (MTD) for Income Tax. MTD will mean that self-employed taxpayers and landlords will be required to submit quarterly updates to HMRC from April 2026 (for those with a gross income above £50,000) and April 2027 (for those with a gross income above £30,000). The autumn Budget not only re-affirmed these timescales but announced the extension of MTD for Income Tax to self-employed taxpayers and landlords with gross income over £20,000 by the end of this Parliament.

For some clients, MTD will require a change in mindset – especially for those who may be used to calling into their accountant’s office with a bag of receipts ahead of the 31 January tax return deadline. Some clients may seek to rely on their accountant to support them with their quarterly updates, and this will undoubtedly need to have an impact on their fees.

Getting ready for mandation

As April 2026 draws near, it’s important to be aware that MTD is not just a case of starting to send quarterly updates to HMRC. Each sole trader/landlord has to be registered with HMRC in advance – this is not just those who are signing up for the trial, but those who will be legally required to submit quarterly updates from April 2026.

When registering for MTD, it is possible to register for both the current and next tax year, so come April 2025, it will be possible to start registering for those clients who will be legally required to submit quarterly updates from April 2026. This may help spread the registration workload for those practices who have a large number of clients to sign up, even if they won’t be taking part in the trial.

MTD also requires digital records and digital links to be kept. We continue to work with HMRC on the scope of the requirements on this, as well as other problem issues such being able to authorise multiple agents.

Post mandation, it’s important to bear in mind that once a sole trader/landlord business is within the scope of MTD, it will be required to continue to submit quarterly updates for three tax years as the income exemption will only apply when qualifying income is below £30,000 for the previous three tax years, although income for a particular tax year will need to be time-apportioned to the annual equivalent if the accounting period is less than 12 months. We expect the £30,000 threshold to be updated in the regulations once the mandation threshold reduces to £20,000 before the end of the current UK Parliament.

Resources to help you get ready

Before Christmas, HMRC issued a Get ready for Making Tax Digital for Income Tax toolkit along with step-by-step guides to register for MTD for Income Tax, either as an agent or as the business itself.

This is in addition to the Use Making Tax Digital for Income Tax guidance and the Check if you need to use Making Tax Digital for Income Tax as well as further guidance on how to work out your qualifying income for MTD for Income Tax. We expect more guidance to be issued in the coming months.

All agents operating in MTD will need an Agent Services Account (ASA). In a recent development, HMRC has confirmed that existing client authorisations within the “old” agent account can be linked to the ASA, so there is no need to secure the digital handshake to register the client for MTD. We think this will be welcomed by tax agents as they begin the process to register their clients in the coming months, as it should significantly reduce the time for a client to be transferred to the ASA.

Volunteering for the HMRC trial

We have previously encouraged our members to consider volunteering for the HMRC trial. If every tax agent volunteered to put a handful of clients into the trial, this would give HMRC a broad spectrum of self-employed taxpayers and landlords to ensure thorough testing during the period where a more lenient penalty system is in place.

While the 2024/25 tax year draws to a close, there is still the option to register clients for the trial in the current tax year provided they have compatible software. This would give the option of additional testing of the year end process.

There is also the option of signing up for the 2025/26 tax year for the public beta phase, so that full testing can take place ahead of MTD mandation in April 2026.

MTD webinars to answer your questions

Back in September, we hosted Craig Ogilvie, HMRC’s MTD Director, and Lenny Barry, from its MTD programme support team, at our Making Tax Digital for Income Tax: Get your practice ready webinar to explore the issues to consider when preparing your practice for April 2026.

We will also be hosting a follow up webinar on Tuesday 25 March, when the HMRC team will be back to give the latest guidance and answer your questions on all things MTD.

Further HMRC events for agents

Following two successful events in Glasgow and Croydon in 2024, HMRC will be organising further in-person MTD events in Leeds, Belfast and Edinburgh in the next couple of months. These events are specifically for agents and software developers with clients who will either be legally required to submit quarterly updates under MTD for Income Tax or may wish to sign up to the testing phase. At each event, you will find out more about the testing phase (including the extra support on offer), understand which clients will be in MTD, understand what the obligations will be, understand the software and discuss the management of clients using ASA.

The MTD events will be held at:

• 24 February 2025 - HMRC Leeds, 7&8 Wellington Place, Wellington Street, Leeds, LS1 4AP
• 4 March 2025 - HMRC Belfast, 20 - 32 Chichester Street, Belfast, BT1 4GF
• 27 March 2025 - HMRC Edinburgh, Queen Elizabeth House, 1 Sibbald Walk, Edinburgh, EH8 8FT

These events have limited spaces so if you are interested and want to attend, please email mailboxmakingtaxdigital@hmrc.gov.uk as soon as possible to secure you space. By emailing HMRC, you are agreeing to be contacted by HMRC before, during and after the event you have signed up for.

As these events are not hosted by ICAS, any queries you may have relating to the events, or the terms and conditions should be directed to the event organisers directly.

Let us know your views

We also welcome your views, which help inform our work on consultations or other tax-related matters. ICAS responds to many tax calls for evidence and consultations, as well as producing tax policy papers and reports. We also regularly attend meetings with HMRC at which service levels, delays and other issues are discussed, and we raise problems being encountered by members.

Please email tax@icas.com to share your insights and feedback.