Making Tax Digital is an HMRC programme requiring businesses and individuals to keep digital records and submit updates using compatible software. It already applies to VAT and is being extended to income tax self assessment for landlords and the self-employed.
In one line: Making Tax Digital requires digital record keeping and software-based submissions to HMRC.
How Making Tax Digital works
The programme replaces manual returns with digital records and regular online submissions through approved software. VAT-registered businesses already comply, and income tax self assessment is being phased in by income level.
From April 2026 the income tax rules apply first to self-employed people and landlords with gross income above 50,000 GBP (HMRC), who keep digital records and send quarterly updates to HMRC through software, then submit a final declaration after the tax year ends.
Compatible software can be a dedicated package or a bridging tool that links to spreadsheets, but records must be kept digitally and connect to HMRC rather than being typed in manually.
Making Tax Digital vs self assessment
Self assessment is the underlying obligation to report income outside PAYE. Making Tax Digital changes how that reporting is done, moving from an annual online return to digital records and periodic updates.
For affected taxpayers the tax owed is unchanged, but the process becomes more frequent and software-driven, with quarterly updates replacing a single yearly submission once they are within scope.
Primary source: GOV.UK: Making Tax Digital