Making Tax Digital for Income Tax: What Directors Need to Do Before April 2026

The April 2026 deadline

From 6 April 2026, Making Tax Digital for Income Tax Self Assessment applies to individuals with gross income from self-employment and/or property exceeding £50,000. If you are in scope, you must use MTD-compatible software to keep records and submit quarterly updates to HMRC, replacing the annual Self Assessment return.

Are you in scope as a director?

The key question: do you have self-employment income or rental income exceeding £50,000 in total? Salary and dividends from your limited company are not self-employment income for this purpose — they are employment income and investment income respectively.

However, if you also:

• Have rental property income above £50,000
• Have a side business as a sole trader earning above £50,000
• Have combined self-employment and property income above £50,000

...then you are in scope from April 2026.

Most pure contractor directors — salary + dividends, no separate self-employment or property income — are not in scope and can continue with standard Self Assessment for 2026-27.

If you are in scope: what changes

Instead of one annual Self Assessment return, you submit:

• 4 quarterly updates (within 1 month of each quarter-end)
• 1 final declaration (replacing the SA return, by 31 January following tax year end)

You use MTD-compatible software throughout the year to record income and expenses. The software submits directly to HMRC via API — you cannot enter figures manually on HMRC's website.

Compatible software options

FreeAgent, Xero, QuickBooks, and Sage all offer MTD ITSA capability. HMRC also maintains a list of approved free software for simple cases. If you already use accounting software for your company, check whether the same provider covers personal MTD ITSA or whether a separate subscription is needed.