MTD for Income Tax is live — what changes if you already do MTD for VAT

There's a common assumption worth clearing up: "I already do MTD for VAT, so I'm sorted." For Income Tax, you may not be. MTD for VAT and MTD for Income Tax are separate systems, with separate sign-ups, separate thresholds and separate timelines. Being compliant for one says nothing about the other.

The timeline that matters

MTD for Income Tax Self Assessment went live on 6 April 2026, and it phases in by income level:

• From April 2026 — qualifying income over £50,000.
• From April 2027 — the threshold drops to £30,000.
• From April 2028 — it drops again to £20,000.

"Qualifying income" here means your gross income from self-employment and property — turnover, before expenses — not your profit. Two sub-threshold income streams can combine to put you over: £45,000 of self-employment plus £6,000 of rent is £51,000, and you're in scope.

A quirk worth knowing: the threshold combines self-employment and property income, but ignores employment (PAYE) wages, dividends and savings interest. It's the trading-and-rental figure that counts.

Partnerships aren't in yet — the government has said it will set a date for them later. Limited companies are outside this entirely; there's no MTD for Corporation Tax date set.

What being "in" actually means

If you're in scope, the annual Self Assessment return gives way to digital record-keeping plus quarterly updates to HMRC through compatible software, then a final year-end declaration. HMRC will write to those it expects to be caught, based on recent returns. There's a points-based penalty regime, though a testing phase has let people get used to the mechanics without penalty risk.

Where this leaves VAT

None of this replaces your VAT obligations — it sits alongside them. If anything, it reinforces the same direction: digital records, software submissions, an audit trail that holds together. The businesses that find these transitions easy are the ones already keeping clean digital records in a cloud ledger, with their VAT scheme calculations handled and documented rather than improvised at quarter-end.