On 21 July 2025, HMRC published draft legislation for Making Tax Digital for Income Tax (MTD IT), subject to consultation. On 24 March 2026, after consultation, The Income Tax (Digital Obligations) Regulations 2026 were laid and come into force on 01 April 2026.
As an overview, the Regulations make provision that requires the use of software to deliver digital information relating to Income Tax to HMRC and to keep records. As you are aware, MTD IT involves the move from the annual Self-Assessment to the use MTD‑compatible software for quarterly updates (and filing the annual return).
These 2026 Regulations replace and consolidate information published in The Income Tax (Digital Requirements) Regulations 2021 and The Income Tax (Digital Requirements) (Amendment) Regulations 2024. So, The Income Tax (Digital Obligations) Regulations 2026 are the single go-to place and they have been restructured so they are clearer to navigate.
ICB highlights what is important for members:
Functional Compatible Software
This is in Part 2 of the Regulations and, simply, requires taxpayers falling within scope of MTD IT to use software that is compatible with HMRC’s filing requirements.
See HMRC’s guidance ‘Choose the right software for Making Tax Digital for Income Tax’, though there is no new information.
Period For Which Digital Obligations Apply
This is in Part 3 and, again, simply, specify the period where digital obligations apply. They specify:
- The ‘digital start date’ – starting April 2026 depending on income in tax year 2024/25;
- The ‘digital termination date’ – the date when someone ceases to be within scope; and, therefore,
- The ‘digital obligation tax years’ – which is the number of tax years that begin with the start date and end with the termination date
This is not new information. See HMRC’s guidance:
Returns and Quarterly Updates
This is in Part 4 and does not contain any new information.
See HMRC’s guidance ‘Use Making Tax Digital for Income Tax’.
Digital Record-Keeping
This is in Part 5 and is not new information, only a consolidation of information contained in the other legislation the 2026 Regulations replace. Essentially:
- If an individual falls within scope;
- They or the agent must use MTD-compatible software;
- To give quarterly updates and an annual return
See the section ‘Create digital records’ within the above guidance.
Amendment and Correction
This is in Part 6 and is not new information. Simply, if the information submitted to HMRC is incorrect, MTD-compatible software must be used to correct it.
See the section ‘Correcting your digital records’ within the above guidance.
Exemptions
This is in Part 7 and does include amendments and provide clarifications. This is in six sections:
1. Exclusion exemption – defining the meaning of exclusion and exclusion notices;
2. Exemptions by reference to amount of income;
3. Exemptions by reference to description of relevant activity and non-residence;
4. Exemptions by reference to description of person;
5. Exemptions based on claim to relief or chargeability to tax; and
6. Temporary exemptions for the tax year 2026-27
ICB will detail Part 7 in a separate article as the purpose of this one is to highlight the consolidated 2026 Regulations.
For Bookkeepers
ICB realise the importance of exemptions and, as above, we will cover this in a separate article.
