With just a few weeks before Making Tax Digital (MTD) for Income Tax comes into effect on 6 April, the countdown is on.
HMRC has been sending letters to thousands of sole traders, landlords and self-employed individuals, warning them their reporting obligations are about to change.
Whether you have received your letter or not, you should act now to ensure you are compliant.
What is MTD for Income Tax?
MTD for Income Tax is HMRC’s move towards a fully digital tax system.
If you are affected, you will need to:
- Keep digital records of your income and expenses
- Use HMRC-compatible software
- Submit quarterly updates to HMRC
- Complete an end-of-year declaration
Quarterly updates will not replace your annual Self-Assessment, but it does mean that you will interact with HMRC more regularly throughout the year.
Who will be affected?
MTD for Income Tax is being rolled out in stages based on your gross income:
- April 2026 – gross income over £50,000
- April 2027 – gross income over £30,000
- April 2028 – gross income over £20,000
Those who fall into the first phase of MTD for Income Tax in April must submit their first quarterly update by 7 August 2026.
You must also keep your digital records accurate from the start of the tax year and file your Self-Assessment return by 31 January 2027.
How can you prepare for MTD for Income Tax?
The time to act is now. You need to move away from paper records and understand your new obligations.
You will then need to choose an MTD-compatible software or use a suitable bridging solution that works for your finances. It is necessary to sign up for MTD for Income Tax, as HMRC will not automatically do this for you. You can then begin digital record-keeping.
HMRC is taking a soft launch approach to MTD for Income Tax and is waiving penalties for the first year, but you must still remain compliant.
Our team can advise you on your reporting requirements, help you implement the right software solution and handle quarterly submissions on your behalf.
