Making Tax Digital for Income Tax – What You Need to Know

So let’s break that down – into plain English.

MTD is HMRC’s plan to make tax reporting more accurate and efficient by moving everything online.
Instead of filing one tax return a year, you’ll keep digital records and send quarterly updates to HMRC using compatible software.
This applies to both self-employed income and property rental income.

So when does it start?

• From 6 April 2026: MTD will apply if your combined self-employment and property income is over £50,000 a year.
• From 6 April 2027: It will apply if your combined self-employment and property income is over £30,000 a year.
• Form a date yet to be decided it will apply if your combined income from those sources exceeds £20,000 a year.

So what will you need to do?

• Use MTD-compatible software to keep digital records of your income and expenses
• Submit quarterly updates to HMRC – every 3 months – for each business or property income stream.
• At the end of the tax year, complete an End of Period Statement and a Final Declaration to finalise your tax position.

You’ll still pay tax at the same times of year – that’s not changing.

Good news – if you’re already using accounting software like Xero, QuickBooks, Sage, or Freeagent for you’re ahead of the curve and may not notice that much change.

But if you also earn rental income, you might need extra software to manage and report that separately.

Is anyone exempt?

Some groups are excluded, at least for now –such as:

• Trusts and estates
• LLPs
• Partnerships with corporate partners
• Limited companies
• People who are digitally excluded

So why is HMRC doing this?

The aim is to reduce tax errors and improve accuracy. They believe many mistakes come from small businesses and landlords, especially those with incomes under £90,000 – who often aren’t using digital tools.
But – it will mean more admin for some people, especially those with multiple income sources and deadlines.

What should you do now?

• Check your income: If it’s over £50,000 a year, you’ll need to comply from April 2026.
• Start preparing early: Talk to your accountant about the software and sytems that are best for your circumstances.
• Consider joining the HMRC test programme in 2025/26 – it’s a great chance to get used to the system without penalties.
• Make sure your current software is MTD-compatible – and if you need help, ask!

Finally…

Yes, MTD is a big change – but with early planning, it doesn’t have to be stressful.
It’s about better records, less guesswork, and fewer surprises when it comes to tax.
We’ll keep you updated and help every step of the way.

Please get in touch if you need support with MTD