MAKING TAX DIGITAL FOR INCOME TAX
Making Tax Digital for Income Tax is set to change how business owners and landlords report earnings to HMRC from April 2026. Part of a wider government initiative, MTD aims to simplify tax reporting through digital recordkeeping and submissions. Following earlier phases of Making Tax Digital for VAT, this next stage will require more taxpayers to adopt compatible software. Understanding these changes early will help you stay compliant, reduce errors, and manage your tax responsibilities more efficiently.
MTD FOR INCOME TAX: ELIGIBILITY CRITERIA
MTD for Income Tax will apply to self-employed individuals and landlords earning over £50,000 from April 2026, based on total gross business and/or property income before expenses for the 2024/25 tax year. This threshold will reduce to £30,000 in 2027 and £20,000 by 2029. Those earning £20,000 or less are currently exempt. The scheme replaces traditional self-assessment, requiring digital recording and regular reporting. Understanding whether you meet the criteria early will help you prepare and avoid disruption when the new rules take effect.
KEY COMPLIANCE REQUIREMENTS
Under MTD for Income Tax, you must:
1. KEEP DIGITAL RECORDS
You must keep digital records of all business income and expenses using compatible software such as Xero, QuickBooks, or Sage.
2. SUBMIT QUARTERLY UPDATES
We must submit a summary of your income and expenses to HMRC every three months.
Standard tax year quarters:
• 6 April to 5 July (due by 7 August)
• 6 July to 5 October (due by 7 November)
• 6 October to 5 January (due by 7 February)
• 6 January to 5 April (due by 7 May)
Alternatively, you may elect to report using calendar quarters:
• 1 April to 30 June (due by 7 August)
• 1 July to 30 September (due by 7 November)
• 1 October to 31 December (due by 7 February)
• 1 January to 31 March (due by 7 May)
Submissions are always due on the 7th of the following month.
3. SUBMIT A FINAL ANNUAL DECLARATION
At the end of the tax year, we finalise your income tax position and submit a final declaration. This replaces the current self-assessment tax return and confirms your final taxable profit, along with any other taxable income. The deadline for the final declaration remains 31 January following the end of the tax year.
OUR MTD SERVICE
We handle:
• Software setup and integration
• Quarterly submissions
• Annual final declaration
• Ongoing compliance support
• HMRC communication where required
Our complete MTD service is expected to be available for a competitive monthly fee of £50, including VAT. Our approach ensures you remain compliant, reduce administrative workload and bookkeeping demands, and focus on running your business with confidence.