If you are self-employed, a sole trader, or a landlord earning more than £50,000 per year, expect a letter from HM Revenue & Customs (HMRC) soon.
It will outline new digital tax reporting requirements under Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA), which comes into effect in April 2026.
What is MTD for Income Tax?
Currently, you submit a Self-Assessment tax return once a year. Under the new system, you will need to:
- Keep digital records of your income and expenses
- Submit quarterly updates via MTD-compatible software
- File an end-of-year declaration to finalise your tax position
When do I need to act?
HMRC is sending out letters from April 2025, based on 2023-24 tax returns. If you qualify, you will have two options:
- Sign up early (from 2025-26) – This allows time to adjust to MTD with support from HMRC.
- Wait until April 2026 – You must comply by this date if you meet the income threshold.
Do I need special software?
Yes, you will need MTD-compatible software to submit updates. If you are unsure which one suits your needs, we can help you choose.
What if I cannot use digital tools?
Exemptions exist for those who are digitally excluded due to age, disability, or lack of access. We can assist with exemption applications.
How can I prepare?
Start exploring software options, get familiar with digital record-keeping, and plan ahead for the transition.
How we can support you
We make MTD compliance easy by:
- Helping you select and set up the right software
- Providing guidance on digital record-keeping
- Ensuring your quarterly updates and annual declarations go smoothly
Although MTD does not come into effect until 2026, preparing early will save time, stress, and last-minute panic. If you need help, get in touch today.
