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MTD IT FAQ and Key Takeaways

A step-by-step walkthrough for mtd it faq and key takeaways

We will continue updating this document as we learn more. LAST UPDATE: 07/10/2026

On Thursday, Johann hosted an informative webinar on MTD IT: important updates, what to expect, how to prepare and also how to manage in Engager.

If you've not watched the webinar, here you go: Getting MTD IT Ready Webinar.

We've also written a series of email templates for you to use to help manage your communication and roll out strategy, using Engager: MTD IT Email Templates.

We also thought that we'd piece together some of the most common concerns and frequently asked questions, that were asked on the Webinar.

  1. What are the MTD Thresholds (please note it's TOTAL INCOME not NET)
    • Over £50,000 in the 2024 to 2025 tax year: MTD IT from 6 April 2026
    • Over £30,000 in the 2025 to 2026 tax year: MTD IT from 6 April 2027
    • Over £20,000 in the 2026 to 2027 tax year: MTD IT from 6 April 2028
    • Sole traders and landlords at or below these thresholds don’t have to use MTD IT, but can sign up voluntarily
  2. What client type are affected first
    • Sole Traders and Landlords are the first to be affected
  3. Is the threshold made of mixed income streams or from Sole Trader / Rental only
    • In short, it’s the total income across all taxable streams, not just one specific source like rental or sole trader income, that counts towards the £50,000, £30,000 and £20,000 thresholds. HMRC calls this your qualifying income: your total income from self-employment and property before expenses. Employment income, dividends, pensions and your share of partnership profit don’t count
  4. Question: Which tax year is the income assessed on
    • The tax year two years before: HMRC checks the Self Assessment tax return you sent in the previous tax year. For example, 2024 to 2025 income decides whether you must use MTD IT from 6 April 2026
  5. Question: what are the quarterly timelines and filing deadlines for each
    • Each quarterly update covers the tax year to date, and is due on the 7th of the month after the period ends
    • 6 April to 5 July: Deadline 7 August
    • 6 April to 5 October: Deadline 7 November
    • 6 April to 5 January: Deadline 7 February
    • 6 April to 5 April: Deadline 7 May (the following tax year)
  6. Question: Are the QTR periods set, or could they follow VAT return periods?
    • The standard periods follow the tax year (6 April to 5 April). You can choose calendar update periods instead (ending 30 June, 30 September, 31 December and 31 March), with the same deadlines. Either way, they may not align with VAT periods.
  7. Question: Any talk about staggering filing to reduce impact on practices?
    • No, HMRC have been clear all quarterly updates are due on 7 August, 7 November, 7 February and 7 May
  8. Question: Any benefit to early adoption?
    • Only the opportunity to gain experience while not mandatory, ready for when it all starts
  9. Question: Can Engager do the filing of the quarterly updates, or will this be done via signing and bookkeeping software?
    • This will be handled by native bookkeeping software and not Engager. We'll assist with tracking jobs / email comms / reporting and signing requests

Other items to note:

  • Filing requirements: Quarterly reports will cover income and expenses from self-employment and rentals, with annual filings summarising all income sources.
  • Quarterly updates are separate from VAT returns and aligned to the tax year (6 April to 5 April), unless you choose calendar update periods. HMRC says they are summaries, not tax returns.
  • Each quarterly update covers the tax year to date, so you can correct your records without resending previous updates.
  • Tax payments remain annual, with no changes to the 31st January deadline.
  • Signing up and opting out: you or your agent sign up for MTD IT. From September 2026, HMRC signs up anyone who needs to use it for the 2026 to 2027 tax year and hasn’t signed up. Once you’re using it, you can opt out only if your qualifying income has been below the relevant threshold for 3 tax years in a row, or if you amended your previous year’s tax return and that took your qualifying income below the threshold.

Update Direct from HMRC: the power of Engager and our community

In our “getting ready for MTD” webinar, several questions were asked that Johann was unable to answer, so Johann contacted Sam Wood, an HMRC Agent Engagement Lead, to help answer the questions, and he was very happy to help!

These answers were given before MTD IT started. Where HMRC’s guidance on GOV.UK has changed since, we’ve updated the answer to match.

1. Will Taxpayers auto enrol in MTD IT?

Not at first. Taxpayers sign up themselves or are signed up by their tax agent. From September 2026, HMRC signs up anyone who needs to use MTD IT for the 2026 to 2027 tax year and hasn’t signed themselves up.

2. Once Enrolled, can a taxpayer exit MTD IT if their income drops below the threshold?

Once you’re mandated, you can only opt out if your qualifying income has been below the relevant threshold for 3 tax years in a row (HMRC checks the fourth quarterly update for the third year), or if you amended your previous year’s tax return and that took your qualifying income below the threshold.

3. When will HMRC start communicating MTD IT to taxpayers?

Comms to customers starting soon

4. Are partnerships included in MTD IT?

Not yet. Your share of profit from a partnership as an individual partner doesn’t count towards your qualifying income. HMRC says partnerships will need to use MTD IT in the future and will set out the timeline later.

5. Which year is considered for the MTD IT income Threshold test?

2024/25 is the assessment year for 2026/27: HMRC checks the Self Assessment tax return you sent in the previous tax year, so it always runs 2 years behind. This provides stability, as status is based on a full year’s tax return. So, each April, look back to the return that was due on 31 January; that’s the return HMRC uses for the tax year that starts on 6 April.

So if the taxpayer’s landlord and/or self-employed turnover was over £50,000 in 2024/25, then they are required to be MTD IT registered in 2026/27; if in 2025/26 the taxpayer’s landlord and/or self-employed turnover was over £30,000 then they will be required to be MTD IT registered in 2027/28; and if in 2026/27 it’s over £20,000, they will be required to be MTD IT registered in 2028/29

As a reminder, the four quarterly updates report income and expenses, the annual tax return reports everything but should be more efficient because the annual report should be auto-populated with information already on record at HMRC such as PAYE

We will continue to deliver content and webinars on this topic ensuring you are ready for MTD IT

Sole Traders Current Thresholds:

  1. From 6 April 2026:
    • Sole traders with gross income over £50,000 in the 2024 to 2025 tax year have had to comply with MTD for ITSA.
  2. From 6 April 2027:
    • The threshold lowers to gross income over £30,000 (2025 to 2026 tax year).
  3. From 6 April 2028:
    • The threshold lowers to gross income over £20,000 (2026 to 2027 tax year).

Key Points:

  • The threshold is based on gross income, not profit. This includes total revenue from self-employment and property rental (if applicable).
  • Those with income below these thresholds are not mandated to join MTD for ITSA but can do so voluntarily.

If you’re a sole trader and your income exceeds the relevant threshold, you’ll need to:

  • Keep digital records.
  • Use MTD-compliant software to send quarterly updates and submit their tax return to HMRC.

Landlord Current Thresholds:

  1. From 6 April 2026:
    • Landlords with gross rental income over £50,000 in the 2024 to 2025 tax year have had to comply with MTD for ITSA.
  2. From 6 April 2027:
    • The threshold lowers to gross rental income over £30,000 (2025 to 2026 tax year).
  3. From 6 April 2028:
    • The threshold lowers to gross rental income over £20,000 (2026 to 2027 tax year).

Key Points:

  • The threshold is based on gross rental income, not net profit. This means it includes the total rental income received before deducting any allowable expenses.
  • If a landlord has both self-employment and rental income, the combined gross income is used to determine whether the threshold is met.

Landlords meeting the threshold will need to:

  • Keep digital records of their rental income and expenses.
  • Use MTD-compliant software to send quarterly updates and submit their tax return to HMRC.

Filing Requirements for MTD IT

MTD IT requires compatible software to send four NEW quarterly updates and one annual tax return. Quarterly updates are summaries, not tax returns. Each one covers income and expenses from the start of the tax year to the end of the update period, and is due by 7 August, 7 November, 7 February and 7 May.

The annual filing will include comprehensive financial details, similar to the current SA100 tax return.

Your Key Takeaways to help with MTD IT Roll Out

1. Categorise your Clients

Begin by analysing your client base to identify those impacted by MTD. This involves sorting clients into categories:

  • Sole Traders: Identify those with turnover over £50,000 (for the 2026 rollout), £30,000 (for 2027) and £20,000 (for 2028).
  • Landlords: Similarly, determine those meeting the turnover thresholds.
  • Exempt Clients: Note clients with income of £20,000 or less, who don’t need to use MTD IT under the announced thresholds but may need monitoring for future changes.

2. Educate Clients

Educate your clients about MTD requirements and their implications. Emphasise the need for compliance, including quarterly filings and the use of accounting software. Clarify common misconceptions, such as how combined income sources (e.g., self-employment and rental income) affect eligibility.

3. Implement Accounting Software

Ensure clients transition to compliant accounting software capable of handling MTD filings. Offer support to onboard them and provide training if necessary. The software should facilitate quarterly submissions and annual filings.

4. Develop a Filing Schedule

Inform clients of the new filing timeline, which includes:

  • Quarterly updates of income and expenses for the tax year to date, due by 7 August, 7 November, 7 February and 7 May.
  • Annual tax returns summarising all income sources, following the tax year (6 April to 5 April).

Align client operations with this schedule to avoid delays and ensure compliance.

5. Provide Ongoing Support

Offer continued assistance to clients, addressing concerns or questions as the rollout progresses. Use resources like webinars, community groups, and direct consultations to ensure they feel supported during the transition.

6. Prepare for Potential Adjustments

Although unlikely, if there are last-minute changes to HMRC guidelines or deadlines, ensure clients are informed promptly. MTD IT started on 6 April 2026, and the £30,000 and £20,000 stages follow on 6 April 2027 and 6 April 2028.

This phased, customer-focused rollout aims to ease clients into the new system while minimising disruptions and ensuring compliance well ahead of the MTD deadlines.