Preparing for Making Tax Digital for Income Tax: What You Need to Know
The UK tax landscape is changing. The government’s Making Tax Digital (MTD) initiative, which currently applies to VAT, will soon extend to Income Tax Self Assessment (ITSA). From April 2026, many self-employed individuals, landlords, and sole traders will face more frequent digital reporting obligations.
If you currently submit a single annual tax return, it’s crucial to understand what these changes mean and how to prepare effectively.
What’s Changing?
Under the new rules, annual Self Assessment returns will no longer be the sole method for reporting income. Instead, taxpayers in scope must:
Maintain digital records of all relevant income and expenses using MTD-compatible software
Submit quarterly updates to HMRC
Complete a final digital declaration at the end of the tax year
These quarterly updates are designed to provide a clearer picture of your tax situation throughout the year, helping you avoid unexpected year-end bills and encouraging more disciplined bookkeeping.
Who Will Be Affected?
From 6 April 2026, MTD for ITSA will apply to individuals with income over £50,000 from self-employment or property. The threshold will drop to £30,000 from April 2027 and is expected to widen further from 2028.
If you’re a sole trader, landlord, or an accountant submitting client returns, it’s important to check whether your income exceeds these thresholds. If it does, you’ll need to adopt the new reporting system.
Benefits and Considerations
Switching to digital reporting can make financial management more efficient. Good accounting software can automate tasks such as expense tracking, report generation, and data accuracy checks, reducing errors and administrative effort.
However, more frequent reporting also means HMRC will spot discrepancies sooner. Late or inaccurate submissions may result in penalties, so early preparation is essential.
How to Prepare
Review your income to see if you fall within the thresholds
Assess your record-keeping processes and move towards MTD-compliant software
Consult your accountant to ensure you’re ready for quarterly submissions and aware of any additional requirements
Free MTD Information Consultation
To help clients and local businesses get ready, we’re offering a series of free MTD consultation. Our experts will cover:
How MTD for Income Tax works in practice
The software you’ll need
How to stay compliant and avoid penalties
Practical steps to take before April 2026
Spaces are limited, so reserve your place today using the link below.
Take Control of Your Finances
The shift to Making Tax Digital represents a major change in income reporting. By preparing early and attending one of our seminars, you can approach the transition with confidence, improve your financial control, and ensure your records are accurate.
If you’d like personalised guidance or want to discuss your readiness for MTD, please get in touch — we’re here to help.