Does Making Tax Digital include pensions

Diploma in Professional Accounting
Diploma for Financial Advisers
Member of London Institute of Banking and Finance

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The Simple Answer: Pensions Are Not Included

Making Tax Digital does not include pensions. This new system is only for people who have:

• Self-employment income (like being a freelancer or running your own business)
• Property rental income (like being a landlord)

What Is Making Tax Digital?

Making Tax Digital is HMRC’s new way of reporting taxes. Instead of filling in a paper tax return once a year, you use special software to keep digital records and send updates to HMRC more often.

Who Needs to Use It?

You only need to use Making Tax Digital if you earn money from:

• Running your own business
• Being self-employed
• Renting out property

The rules depend on how much you earn:

• From April 2026: If you earn over £50,000 from these sources
• From April 2027: If you earn over £30,000 from these sources
• Future plans: The government wants to lower this to £20,000 later

What About Your Pension Income?

If you only get income from pensions, you do not need to use Making Tax Digital. This includes:

• State pension
• Workplace pensions
• Private pensions

However, if you get a pension and you also earn money from self-employment or property rental above the limits, then you will need to use Making Tax Digital for those other income sources.

How Pensions Are Handled

When you do use Making Tax Digital software, you can still report your pension income through the same software when you submit your tax return. The software must be able to handle pension income, even though you don’t need to keep digital records for it.

As the government explains: “You only need to create digital records of your self-employment and property income and expenses. You do not need to create digital records for other income sources, but your software must be able to report them on your tax return. This may include income such as from pensions”

Making Tax Digital: Key Points for Pension Recipients

1. Pension income only = No Making Tax Digital requirements
2. Self-employment or property income above thresholds = Must use Making Tax Digital
3. Mixed income sources = Use MTD for business income, report pension income through the same software
4. Gradual rollout = Higher earners affected first, then lower thresholds over time

Frequently Asked Questions

Q: Does Making Tax Digital include pensions? A: No, state pension income is not subject to Making Tax Digital requirements.

Q: Do I need MTD software for workplace pension income? A: No, workplace pensions are exempt from Making Tax Digital record-keeping rules.

Q: What if I’m self-employed and receive a pension? A: You’ll need MTD for self-employment income (if above thresholds), but not for pension income.

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Official Making Tax Digital Guidance

For the latest updates and detailed guidance, visit these GOV.UK resources:

• Making Tax Digital for Income Tax guidance
• Check Making Tax Digital eligibility
• Tax on pension income information
• Making Tax Digital software options

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This article is based on information from GOV.UK as of September 2025. Tax rules can change, so always check the latest guidance.

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