Global Daily Tax News, UK Tax Agency Updates MTD For Income Tax Guidance, (Dec 5, 2025)

HM Revenue and Customs has updated its guidance on obligations and penalties in relation to Making Tax Digital for Income Tax.

The guidance has been updated with information about what digital records should kept by taxpayers using the trading income allowance, the property allowance, and the Rent-a-Room Scheme.

The guidance discusses record-keeping obligations for taxpayers newly receiving self-employment or property income, and for records generated by software connected to taxpayers' bank accounts.

Information has also been added about changing software and changing tax agents.

Finally, the guidance has been updated to clarify how penalty points work for taxpayers that miss a deadline for sending an update. The guidance notes that taxpayers failing to provide a quarterly update may be charged a late submission penalty. The guidance notes that the penalties will not, however, apply for taxpayers volunteering to test Making Tax Digital for Income Tax.

HMRC has confirmed, for the first 12 months of Making Tax Digital for Income Tax, launching from April 6, 2026, the agency does not intend to apply penalty points for late quarterly updates. However, penalty points will still apply for late tax returns.

Quarterly updates must still be provided before the submission of a tax return.