HMRC have published the statistical report, 'Official Statistics 'Making Tax Digital for Income Tax business population statistics: commentary', which indicates that 864,000 individuals will have to sign up by April 2026.
The new report provides statistics on the impact on the business population of the introduction of Making Tax Digital (MTD) for Income Tax (IT), based on earlier years' self-assessment returns. When an individual must start using MTD for Income Tax depends on their qualifying income within a tax year.
If their qualifying income is over:
- £50,000 for the 2024-25 tax year, they will need to use MTD for IT from 6 April 2026.
- £30,000 for the 2025-26 tax year, they will need to use MTD for IT from 6 April 2027.
- £20,000 for the 2026-27 tax year, they will need to use MTD for IT from 6 April 2028.
There were 7 million individuals within Income Tax Self Assessment (ITSA) with landlord or self-employed sole trader businesses in the tax year 2023-24.
Number of ITSA businesses by qualifying income
| Qualifying Income | Self-Employed only (not a Landlord) | Landlords only (not Self-Employed) | Self-Employed and a Landlord |
|---|---|---|---|
| up to £10,000 | 1,153,000 | 1,218,000 | 58,000 |
| £10,000.01 to £20,000 | 870,000 | 712,000 | 92,000 |
| £20,000.01 to £30,000 | 637,000 | 263,000 | 75,000 |
| £30,000.01 to £50,000 | 798,000 | 182,000 | 97,000 |
| over £50,000 | 605,000 | 118,000 | 141,000 |
- From April 2026, businesses with a qualifying income over £50,000 must join MTD for IT. Based on 2023-24 tax figures, there are 864,000 individuals with a qualifying income over £50,000.
- Another 1,077,000 individuals with a qualifying income between £30,000 and £50,000 will need to join MTD for IT in April 2027.
- A further 975,000 with a qualifying income of £20,000 to £30,000 will join MTD in April 2028.
Agent representation
Authorised agent representation increases with a higher qualifying income, although for those with lower income (below £10,000), over half have agents. For those with over £50,000 qualifying income, 75% were represented by an authorised agent.
ITSA businesses with authorised agent representation
Software use
The report also looked at the number of businesses that used commercial software to submit Self Assessment returns. It was pointed out that while commercial software is used for the online end-of-year Self Assessment return, it does not necessarily mean that software has been used for record-keeping or preparing the return.
Numbers of businesses that use commercial software to submit the Self Assessment return
The numbers show that software use is much higher for those who have an authorised agent (73%). However, a higher qualifying income did not lead to higher software usage.
- For businesses with an agent and over £50,000 qualifying income 78% used software to submit an end-of-year return compared to only 21% for those without an agent.
- For businesses with over £50,000 qualifying income 63% used software to submit their end of year return for 2023-24.
Useful guides on this topic
Making Tax Digital: MTD Roadmap Infographic
A downloadable Making Tax Digital for Income Tax Roadmap Infographic which sets out the new rules in a graphical format, ideal for ‘visual learners’ and those who don’t like reading! This infographic is designed to allow you to add your firm’s branding.
Compare software for Making Tax Digital for Income Tax
What software is available for MTD for Income Tax? What's the most suitable software I can use? Which software does HMRC list as working for MTD for Income Tax? What to consider before choosing software?
Making Tax Digital: Survival guide (for the self-employed & landlords)
The way that some self-employed taxpayers report their business profits to HMRC is set to change under the Making Tax Digital (MTD) for business regime, when it begins to apply to Income Tax reporting.
External links
HMRC: Official Statistics, Making Tax Digital for Income Tax business population statistics: commentary