Making Tax Digital (MTD) is a UK government initiative designed to modernise the tax system by requiring individuals and businesses to:
MTD for Income Tax Self-Assessment (ITSA) will apply to individuals with qualifying income above certain thresholds. This includes:
HMRC has released new rules stating who will be covered by the MTD regime. Previously if you had to complete the residence pages of your tax return you would not need to register for MTD. HMRC has now changed this approach and all individuals that have the relevant level of self-employment and property income, will need to register for MTD, even if they need to complete the residence pages. These individuals will now need to file quarterly MTD returns and an annual tax return.
What’s changing?
Previously, individuals that completed the residence pages were exempt. Under the updated rules:
The updated timetable introduces a staggered rollout based on income levels. Key dates are:
| Updated rollout timeline | |
| Start date | Annual self-employment + property income |
| 6 April 2026 | Gross income over £50,000* |
| 6 April 2027 | Gross income over £30,000* |
| Expected 6 April 2028 | Gross income over £20,000* (subject to legislation) |
*Note these limits are for gross income before expenses
This phased approach replaces the prior, more abrupt implementation plan.
New late payment penalty regime
From April 2025, HMRC will enforce a revised penalty structure for late tax payments under MTD:
| New late payment penalty regime | ||
| Days late | New penalty (from 2025) | Column title |
| 15 days | 3% of unpaid tax | 2% |
| 30 days | Additional 3% | 4% (cumulative) |
| Beyond 31 days | 10% annualised penalty | N/A |
This shift reflects a stricter and more immediate penalty structure, emphasizing timely compliance.
Clarified eligibility criteria
The £30,000–£50,000 thresholds refer only to self-employment and property income combined. Income from:
…does not count toward the MTD threshold, but also does not exempt you if your qualifying income exceeds it.
Example:
A UK-resident employee earning £90,000 and £32,000 in UK rental income must join MTD for ITSA from April 2027.
At Vialto Partners, we understand the challenges this transition presents—especially for individuals with cross-border income, global mobility, and non-domiciled tax positions. Our services include:
Whether you’re a mobile employee, landlord, or business owner, we provide end-to-end support to ensure MTD compliance — with minimal disruption.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Martin Muhleder
Partner
Andy Fahey
Partner
Ben van den Dungen
Senior Manager
Simply follow our Vialto Alerts page on LinkedIn and posts will be displayed on your feed. To ensure you don’t miss one, once you’re on our LinkedIn page, click on the bell icon under the banner image to manage your notifications.
Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
© 2025 Vialto Partners. All rights reserved.