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Making Tax Digital for Income Tax: What It Means for You and How to Prepare

From April 2026, the UK tax system enters a new digital era. Making Tax Digital for Income Tax Self Assessment (MTDfITSA) will change how sole traders and landlords report income to HMRC. If you fall into these categories, this is one of the biggest changes in decades—and preparation is key.
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What Is Changing?
Instead of filing one annual Self Assessment return, affected taxpayers will need to:
• Keep digital records of income and expenses using HMRC-approved software.
• Submit quarterly updates to HMRC.
• File a final declaration at year-end (similar to the current tax return but digitally).
This aims to reduce errors, improve accuracy, and give taxpayers a clearer view of their tax position throughout the year.
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Who Is Affected and When?
MTDfIT applies to sole traders and landlords based on gross income (before expenses) from self-employment and property combined:
• From April 2026: Income over £50,000
• From April 2027: Income over £30,000
• From April 2028: Income over £20,000
If you meet these thresholds, you must comply—even if you already file online.
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What Will You Need to Do?
1. Choose MTD-Compatible Software
Spreadsheets alone won’t suffice unless linked via bridging software.
Action: Speak to us about approved solutions.
2. Start Digital Record-Keeping
Record income and expenses digitally from now to make the transition easier.
3. Prepare for Quarterly Updates
Updates are due one month after each quarter ends:
o Q1: 6 Apr–5 Jul → 7 Aug
o Q2: 6 Jul–5 Oct → 7 Nov
o Q3: 6 Oct–5 Jan → 7 Feb
o Q4: 6 Jan–5 Apr → 7 May
Plus a Final Declaration by 31 January after year-end.
4. Understand Penalties
HMRC will introduce a points-based penalty system for late submissions.
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Why Act Now?
• Avoid last-minute stress and penalties.
• Get familiar with digital tools early.
• Improve cash flow visibility with real-time tax estimates.
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Next Steps
• Check if you’re affected: Add up your gross income from self-employment and property.
• Book an MTD Readiness Review: We’ll help you choose software, set up digital records, and plan for quarterly reporting.
Book Your MTD Readiness Review